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.
This book, which has not been yet published, it is a recompilation of different chapters whit article structure. Each one has been written by different authors and explains independent topics from multiple contexts. Authors are academicians with a long experience in the field, so all chapters are outstanding for themselves.
In the last few years, small firms have had difficulties to finance their projects via the traditional bank system. A new type of financing has recently appeared in Europe and in particular in France: the crowdfunding. It is a method for funding a variety of new ventures, allowing individual founders of for-profit, cultural, or social projects to request funding from many individuals via Internet. This paper contributes to the literature by introducing this financial innovation and building a theoretical framework to explain its success. It is also discussed some more practical issues to enhance crowdfunding in France.
The article presents the status of the crowdfunding market in Italy and discusses its future prospects. After defining the crowdfunding phenomenon and highlighting its main elements, it presents the results from the Italian Crowdfunding Observatory, managed by the three authors at the Department of Management, Economics and Industrial Engineering of Politecnico of Milano.
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