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TYPES OF CROWDFUNDING
Donation model A financial
contribution to a project without any
economic benefit to the donor.
Debt model A loan where the
donor will be repaid based on agreed
terms and conditions.
Equity model Investor receives an
equity stake in the project.
CROWDFUNDING PLATFORMS
As of 2012, there were over 450 crowdfunding
platforms
Relational mediators act as an intermediary
between supply and demand.
Theyreplacetraditional intermediaries
(traditional record companies, venture
capitalists).
These platforms link new artists, designers,
project initiators with committed supporters
who believe in the persons behind the projects
strongly enough to provide monetary support.
CROWDFUNDING PLATFORMS
Growth engines focus on the strong
inclusion of investors. Theydisintermediateby eliminating the
activity of a service provider
previously involved in the network.
The platforms that use crowdfunding
to seek stakes from a community of
high-net-worth private investors and
match them directly with project
initiators
DISADVANTAGES
If you don't have an engaging story to tell, then your
crowdfunding bid could be a flop.
It could be even worse if you meet your goal but
then realize you underestimated how much money
you needed. A business risks getting sued if it
promises customers products or perks in return for
donations, and fails to deliver.
angel investors and even bank officers provide more
than just money. They provide entrepreneurs with
needed advice. Business owners miss out on such
mentorship when they ignore traditional investors
and turn to the crowd.
Go fundme
Kickstarter
Indiegogo
Teespring
Youcaring
Patreon
Crowdrise
Kiva
Give forward
Donors choose
ADVANTAGES
Crowdfunding provides another strategy for
startups or early stage companies ready to
take it to the next level, rolling out a product
or service. Before, a business owner was
subject to caprices of individual angel
investors. Now its possible to pitch a business
plan to the masses.
A successful crowdfunding provides your
business with needed cash, creates a base of
customers who feel as though they have a
stake in the business' success.
CROWDFUNDING IN INDIA
Crowd-funding is not new to India. However,
the emergence of platforms that promote
crowd-funding is fairly recent to India.
These platforms help start-ups or small
businesses meet their funding requirements.
Crowd-funding has been in India for quiet a
few years now however still the quantum of
funds collected is very much low as
compared to the crowd-funding platforms in
USA and Europe.
CROWDFUNDING IN INDIA
In India, the Securities and Exchange Board of
India (SEBI) released aconsultation paperin
2014 which, inter alia, proposes a framework
for ushering in crowdfunding by providing startups and small-and-medium enterprises (SMEs)
access to the capital markets and to provide an
additional channel of early-stage funding.
Within India, if one looks a little closely, the
crowd-funding platforms themselves fall into
three broad categories namely Social causes,
Business/Startups and Arts & Culture.