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Business Law Assignment on Crowdfunding PDF

   

Added on  2020-03-28

11 Pages2604 Words48 Views
Running head: CROWDFUNDING 0Business LawAssignment

CROWDFUNDING1ContentsIntroduction................................................................................................................................2Analysis of Crowdfunding.........................................................................................................3Conclusion..................................................................................................................................8Bibliography...............................................................................................................................9

CROWDFUNDING2IntroductionCrowdfunding is a new method of collecting investment for start-ups, entrepreneurs, and small corporations. It allows small entrepreneurs to collect investment for their projects from different small investors. Various people such as family, relatives, friends and other people looking for small investment opportunities can invest their capital into crowdfunding projects. The crowdfunding has gained significant popularity in countries such as the United States and the United Kingdom. In Australia, the government has passed new regulations to enhance the role of crowdfunding.Crowdfunding provides funding to such entrepreneurs project which cannot be funded by large financiers such as venture capitalists, angel investors and banks. This essay will provideinformation regarding crowdfunding to Howard Jones, to determine whether crowdfunding method is beneficial for his project. Further, the essay will compare the crowdfunding procedure of other countries with Australia and analyse the regulations prepared by the Australian government.

CROWDFUNDING3Analysis of Crowdfunding Technology has grown rapidly in past few years and new innovations are made by entrepreneurs each day. These innovations have increased the number of entrepreneurs and people who want to start their own companies. Most of such people require funding for their projects and traditional method of investment is not suitable for them1. Large investment organisations, such as venture capitalists, banks or investment firms, prefer to invest their capitals in potentially large business ideas or high investment projects. It is considerably difficult for entrepreneurs to generate capital for their investments without selling their idea to other corporation. Therefore, crowdfunding has gained popularity in past few years. Entrepreneurs use crowdfunding method to raise capital from small investors for their projects2. Crowdfunding connects investors and entrepreneurs through online websites, where investorscan contribute a small amount for entrepreneur’s project. Crowdfunding is a part of the crowdsourced funding in which capital is raised by the crowd3. There are four different types of crowdfunding methods. The first method is reward based; in which financiers get certain incentives by investing in a particular project. The second method is charity based the project which is non-profitable and works for improving people’s lives are funded through this method. Various small charitable organisations use this platform to raise capital for charitablepurposes4.The third method is equity-based crowdfunding; the financiers get shares of the company for their capital in the entrepreneur's project. The fourth method is lending based crowdfunding, the capital invested by people is considered as loan and the company repays such loans with proper interest. To select any one of the above-mentioned methods, it is necessary that the entrepreneur follows few steps. The most important step is providing full details regarding 1Alessandro Cordova, Johanna Dolci, and Gianfranco Gianfrate. "The determinants of crowdfunding success: Evidence from technology projects."Procedia-Social and Behavioral Sciences181 (2015): 115-124.2Garry Bruton, et al. "New financial alternatives in seeding entrepreneurship: Microfinance, crowdfunding, and peer‐to‐peer innovations."Entrepreneurship Theory and Practice39.1 (2015): 9-26.3Paul Belleflamme, Thomas Lambert, and Armin Schwienbacher. "Crowdfunding: Tapping the right crowd."Journal of business venturing29.5 (2014): 585-609.4Helen G. Klaebe, and Rebecca Laycock. "How to work the crowd: A snapshot of barriers and motivations to crowdfunding." (2012).

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