January 2, 2014

Crowd Funding


Joseph Pulitzer, a newspaper man lead founding the pedestal for statue of Liberty in 1885 from crowd sourcing the funds. The trend is back...although the books on corporate finance mention less of it.

Recently, a wooden pedestrian bridge was built in Rotterdam (Dutch City) through crowd sourcing. Locals paid 25 euros each for the right to edge their message on one of the wooden plans that make the bridge.

As of April 2012, based on Crowdsourcing.org's Directory of Sites, the most complete database of crowd-funding sites, there were 452 crowd-funding platforms active worldwide. These platforms together raised almost $1.5 billion and successfully funded more than one million campaigns.

There are 3 specific models of crowdfunding as below:
- Donation Model (Donation in return of kind of intangibles like name engraved or first customized product etc)
- Lending Model (Kind of Personal Loans)
- Equity Model (Kind of Venture Capital where the contributors become share holders)

To promote entrepreneurial mindset, the US govt signed the Jumpstart Our Business Startups (JOBS) Act. The objective of this act is to provide cost-effective access to capital for companies of all sizes. Such a kind of rule is thought to be inacted in India to give boost to Innovation capability.

I have tried to visit some of the more active ones so as to give you an over view in my next post http://www.findings.co.in/2014/01/crowdfunding-platforms.html

References:
-       Economist magazine

No comments:

Post a Comment