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Introduction to Crowd Funding Process

   

Added on  2020-02-24

16 Pages2199 Words144 Views
FinancePolitical Science
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Running Head: CROWDFUNDING Crowdfunding
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CROWDFUNDING1IntroductionCrowd funding is a process which provides financial help to small new business or start-ups by raising capital from many people, who can be any one relatives, friends and investors1. It is a collective effort of a large number of individuals. And in this instant case Howard Jones wants tointroduce his idea related to batteries in the market and he knows crowdfunding is a process which will help him in raising crowd funding2 and this report is based on crowd funding. That how it is works and how it’s helpful for new business and for start-ups. We are also discussing the success of crowd funding in the social field and how crowd funding is helpful in the commercial world. Further, we are discussing the legislative framework of crowdfunding in Australia and how it's different from another international framework of crowd funding.Crowdfunding: Meaning and Explanation Crowdfunding gives perfect platform for new businesses to introduce and share their creative ideas related to their new project by providing large number of investors and funding options. It carries the entrepreneurs and investors together via the crowdfunding website. There are four types of crowd funding3 Reward based crowdfunding in which individuals contributes in the business for the reward offered by the company and the second type of crowdfunding is based oncharity, social cause in which investors do not get any financial return. The third one is equity 1 Monash Vitale, Crowdfunding: Recent International Developments and Analysis of Its Compatibility with Australia’s Existing Regulatry Framework (September 13 2013) <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2324573>.2 Australian Securities & Investment Commission, Crowd-Sourced funding (28 August 2017) <http://asic.gov.au/regulatory-resources/financial-services/crowd-sourced-funding/>.3 Leigh Schulz & Domenic Mollica, The regulation of crowdfunding in Australia: Where are we and what’s to come? (August 2015) <http://forms.minterellison.com/files/Uploads/Documents/Publications/Articles/Aus-banking-and-finance-law-bulletin_leigh-schulz-anddomenic-mollica_aug2015.pdf>.
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CROWDFUNDING2based crowd funding which also known as crowdsourced is funding in which investors invest in the business and in exchange take the shares of the company. The last type of crowdsourcing is klanding based crowdfunding in which entrepreneurs collect money as debt from investors whichhave to return with interest. Entrepreneurs who want to start crowd funding for their business hasto follow some steps.4 They have to give all relevant information related to business ideas to investors about the product, goals, required fund, timeframe related to product development, and at last about the rewards and incentives to the investor in exchange for funding. There are many crowd funding website through which they can post about their business offer to invite the investors.5Commercial and Social Examples of Crowdfunding According to Financial System Review given by David Murray considered crowd funding is oneof the leading technique in Australia’s economy which supports innovative businesses and startups. The first is rewards-based crowdfunding, in which people who are contributing money to a future product will be given guaranteed by the people who are seeking to crowd fund that they will be the first among the individuals to get reward if they increase the fund. One of the leading platforms for crowd funding are Indiegogo and Kickstarter. Equity crowdfunding is the second way through which investors contribute in business to get a share of such business. Artesian Venture Partners’s COO Tim Heasley said the Australian law considered only those 4 Australian Government, Crowdfunding: How to Fund Your Business (22 May 2017) < https://www.business.gov.au/info/run/finance-and-accounting/finance/crowdfunding-how-to-fund-your-business-idea>.5 Shannon Kelly, ‘The Future of Equity Crowdfunding in Australia’ (2017) Company and Securities Law Journal.
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CROWDFUNDING3wholesale investors who can contribute in equity crowdfunding must have $2.5 million in properties or income at least $250,000.Ingogo, In 2014, through crowdfunding website Kickstarter investors contribute more than $ 500 million for more than 22,200 projects. Two Australian companies Ninja Blocks and Startmate startup KoalaSafe raise funds through Kickstarter.6Crowdfunding is easy fundraising online process for a nonprofit organization, individuals, and charities. It has the capability to delivers great supports for charities and donors. We have several successful examples of donation based crowdfunding which helped people to raise money. Eliza who was 4 year of age was suffering from Sanfilippo syndrome, a hopeless neurological disorder. Her parents use the internet in the hope that anyone might help their child. They got faith in a therapy trial which will perform in Ohio but researchers needs approx. $2.5. Eliza's father made several homemade videos and got donations which were not sufficient. Benjamin Von Wong a professional filmmaker joined the team and made a video related to Eliza’s story and gave the name hashtag #SavingEliza, the video went popular and got $380,000donations in the few months. Today, campaign saving Eliza has been increased $1.8 million funds in four months.76 Alex Heber, A crowdfunding revolution is coming to Australia (30 April 2015) <https://www.businessinsider.com.au/a-crowdfunding-revolution-is-coming-to-australia-heres-what-you-need-to-know-2015-4>.7 Larry Kim, Most Sucessful Feel-Good Crowdfunding Campaigns of the Year (2 January 2015) <https://www.inc.com/larry-kim/most-successful-feel-good-crowdfunding-campaigns-of-the-year.html>.
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