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Commercial and Corporation Law

   

Added on  2020-02-19

12 Pages2376 Words67 Views
FinancePolitical Science
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Commercial and Corporation Law_1

CROWDFUNDING2IntroductionCapital is a key requirement for any company as for buying the inputs, for paying salaries, for buying land, equipments and for numerous other works of any business, capital is needed. There are different manners in which a company can raise its capital1. The conventional methods include issue of shares, debentures, taking loans and the like. However, the unconventional methods of the recent time are gaining a lot of popularity and one of these methods is crowdfunding2. Often the people have a lot of great ideas but the shortage of funds acts as a barrier in the idea being transformed into a success. In order to solve these issues, the crowdfunding was born. Crowdfunding is especially successful in such cases where an innovative product is created3. In the following parts, the different aspects associated with crowdfunding have been highlighted so that Howard Jones can raise the capital for developing his idea and bring the product to the market.CrowdfundingCrowdfunding can be defined as one of the mediums of raising capital from the general public, without issuing any shares or without having to mortgage the property. The people who generally invest in crowdfunding include family, friends, venture capitalists and potential investors. This is a collective approach of the efforts of a group of people and the capital in such 1 Paul Latimer, Australian Business Law 2012 (CCH Australia Limited, 31st ed, 2012)2 Igor Micic, Crowdfunding: Overview of the Industry, Regulation and Role of Crowdfunding in the Venture Startup(Anchor Academic Publishing, 2015)3 Steven Dresner, Crowdfunding: A Guide to Raising Capital on the Internet (John Wiley & Sons, 2014)
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CROWDFUNDING3cases is mostly raised through online mediums, particularly the social media. It is a rising medium of raising the capital and due to these reasons, the platforms for raising money through crowdfunding platforms are increasing on daily basis4. Through crowdfunding, a wider pool of investors becomes available and presents different flexible fundraising avenues. Crowdfunding helps in raising funds for entrepreneurial undertakings, artistic and creative plans, and even for the society and not for profit oriented social entrepreneurship projects. Through the help of this medium, a number of start-ups have skyrocketed, which would have just been dreamy ventures if they had not got the required funds. Through crowdfunding, the venture capitalists are also attracted towards the start-ups due to the wide reaching internet platform and through which, the gap between the outsized and undersized organizations is bridged at the very beginning of the businesses5. There are different manners in which capital can be raised by using the crowdfunding mode for raising the capital. This includes reward based, donation based, and equity based. In therewards based crowdfunding, the capital which the people contribute in the business of the person asking for crowdfunding is exchanged for a particular reward, which can be in form of services or products which the company offers6. This helps in raising the capital without incurring more expenses or without putting the ownership at stake. Donation based crowdfunding denotes a communal endeavour for diversified people owing to certain benevolent reasons. And lastly, the equity based crowdfunding is one in which the people investing are 4 Alexander Pascal Borner, Crowdfunding - A successful Way of New Venture Financing? (Tredition, 2016)5 Walter Vassallo, Crowdfunding for Sustainable Entrepreneurship and Innovation (IGI Global, 2016)6 Thomas Elliott Young, The Everything Guide to Crowdfunding: Learn how to Use Social Media for Small-business Funding (Everything Books, 2013)
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CROWDFUNDING4made the part of organization as they are offered the company’s equity shares for their part of contribution7. Successful CrowdfundingCrowdfunding is commonly used in commercial contexts for developing products, ideas goods, and services; and are even used in charitable and social contexts. The example of each one has been highlighted below.In the history of crowdfunding done till this day, the most successful campaign, have been the one of Star Citizen. This is an online space combat and trading video game and the developers of it are Chris Roberts and Cloud Imperium Games. This crowdfunding campaign was initiated back in October 2012 on the very website of this game, through IgnitionDeck which is one of the crowdfunding plug-ins of Wordpress. Just one week since this crowdfunding campaign began; the funds were being raised through the kick-starter campaign. The first goal ofthis funding was attained in a swift manner. Once this was done, new associated objectives were added by the developers to this funding campaign in order to expand the targets for this crowdfunding. Due to the changed targets, the date of the campaign was also given a ten day extension so that the closing date of the kick-starter campaign could be matched and further capital could be raised8. Merely two days before this campaign was supposed to conclude, a record of the most crowdfunded gaming project was attained by this game and raised more than US$4.2 million. 7 Martha Damus, Online Crowdfunding Platforms: Developing Concepts for Supportive Instruments Beyond the Funding Phase (Ikosom, 2014)8 Laura Parker, Video Game Raised $148 Million From Fans. Now It’s Raising Concerns (10 May 2017) <https://www.nytimes.com/2017/05/10/technology/personaltech/video-game-raised-148-million-from-fans-now-its-raising-issues.html>
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