This paper looks at how online crowdfunding platforms CFPs and other peer-to-peer lending sites are beginning to alter the way in which charities and non-governmental organizations finance their activities. In addition, it also discusses how these sorts of investment platforms have the capacity to affect the way in which individual actors engage with one another at both the local and transnational level. Overall, then, what this paper shows is that, aside from their evident financial and economic benefits, CFPs also have the capacity to help foster and strengthen non-parliamentary democratic structures and practices.
In this paper the origins, concept, and models of crowdfunding are studied to finally show an example for the music industry analyzing the concrete case of Verkami (a well-known Spanish platform).
In this paper, it has been examined how geography affects the formation of crowdfunded projects. It has been collected data on housing prices and local credit markets that are known to determine the cost of accessing traditional sources of credit and matched these data to a novel data set from a leading crowdfunding market. It has been found that small cities appear to get a disproportionate benefit from crowdfunding. Findings also show that difficult access to credit from local banks induces entrepreneurs to rely more on crowdfunding. Moreover, tighter credit constraints due to a drop in housing prices have a stronger effect on entrepreneurs who initiate large projects and live in high income areas. The impact of a local credit market structure is almost entirely via ‘location-independent’ projects that attract less funding from local people. Overall, it has been provided evidence that web-enabled crowdfunding has the potential to democratize access to capital in that it can be a viable option for entrepreneurs having difficulty accessing traditional offline channels of credit.
Crowdfunding poses two issues under federal securities law. First, some, but not all, crowdfunding involves selling securities, triggering the registration requirements of the Securities Act of 1933. Second, the web sites that facilitate crowdfunding may be treated as brokers or investment advisers under the ambiguous standards applied by the SEC. The study considers the costs and benefits of crowdfunding and proposes an exemption that would free crowdfunding from the registration requirements, but not the antifraud provisions, of federal securities law. To qualify for the exemption, crowdfunding sites would have to be open to the general public; provide public communication portals for investors and potential investors; require investors to fulfill a simple education requirement before investing; prohibit certain conflicts of interest; not offer investment advice or recommendations; and notify the SEC that they are hosting crowdfunding offerings.
Managers interviewed in the study on which this report is based have reported that transparency, participation, learning communities and open-information benefit economic efficiency, and success reinforces democratic practices. They are committed to reducing investment risks, allowing the best projects to go forward, assisting creators and funders, facilitating transactions and verifying customer rights to create a more secure and efficient environment for investment. As conclusion, a series of interesting policy recommendations have been made in this report.
Models of social movements indicate that when conformity is a concern, high initial participation can lead to herding behavior. In contrast, if backers are only interested in a project’s success, then others’ contributions will encourage free riding. Results based on data collected daily from two months of Kickstarter projects show that funds raised in the first day of a campaign are positively related to the percentage of the funding goal raised at the campaign’s end. However, when controlling for a project’s total backers, first day backers are negatively associated with measures of success.
In India crowdfunding is still in its nascent stage even though the potential is incredibly high. The paper studies the select Indian online crowdfunding platforms (CFPs), their area of focus, fund raising strategies, and their revenue models. CFPs not only support business activities but also social causes. E.g. Ketto (www.ketto.org) supports NPO, creative and social causes through the platform. The CFPs were selected to represent a diverse set of crowdfunding sectors and the availability of data.
Two years of publicly available data on projects listed on Kickstarter is used to establish that the typical pattern of project support is U-shaped — in general, backers are more likely to contribute to a project in the first and last week as compared to the middle period of the funding cycle. The study further establishes that this U-shape pattern of support is pervasive across projects, including both successfully and unsuccessfully funded projects, those with large and small goals, and projects in different categories. It then empirically explores the dynamics associated with several factors, including collective attention effects from platform sorting options, the role of family and friends in supporting projects, the effects of social influence, and the role of project updates over the project funding cycle.
This paper examines crowdfunding as a potential tool for cultural funding. After an introduction to crowdfunding, its rise and its use in various contexts, the paper discusses crowdfunding’s potential as a tool for funding cultural production. Crowdfunding is associated with a range of hopes and ideals, but problems with crowdfunding, as well as with crowdsourcing, can also be identified. This paper provides an assessment of the problems and potentials of crowdfunding in the context of cultural funding in particular.
In this study written by an important Spanish financial institution, it is discussed the most financial side of crowdfunding. It explains how it can be a good alternative to those who cannot access to traditional methods and that even banks could try to use it in any of its forms. However, before it is necessary to have a clearer and complete regulation beforehand.
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