Dissertation: Crowd Funding and the Success of New Start-ups

This dissertation explores the impact of crowd funding on the success of start-up businesses. It investigates how crowd funding serves as an alternative financing method, enabling entrepreneurs to transform business ideas into reality. The research employs an interpretivism philosophy and an inductive approach, utilizing online surveys and literature reviews to assess the contribution of crowd funding. The study aims to understand the concept of crowd funding, its role in meeting financial requirements, its association with start-up growth, and to recommend ways to maximize success through crowd funding. The dissertation includes an introduction, literature review, methodology, data analysis, and conclusion, providing insights into how start-ups can leverage crowd funding to meet financial needs and achieve growth. The research also acknowledges the risks and challenges associated with crowd funding, such as the potential for project failure and the importance of marketing efforts.

DISSERTATION

Abstract
Crowd funding may be served as a new way or method of financing which in turn
enables entrepreneurs to convert their business ideas into reality. Moreover, each business entity
or entrepreneur has some unique ideas and plan but due to the lack of having enough financial
resources it is not possible for them to achieve success. In this regard, by raising funds from
large number of people over internet business entity can meet financial needs to a great extent.
With the aim to assess the extent to which crowd funding makes vital contribution in the success
of new start-ups interpretivism philosophy and inductive approach has been selected. Besides
this, to conduct study within the suitable time frame online survey has been conducted.
Further, books and journals related to crowd funding & new start-ups also have been
evaluated by the researcher to prepare brief thesis regarding study. In addition to this, by using
simple random sampling technique has been used by the researcher to opt 30 respondents for
survey. It can be observed that usually funds are raised from the banks and other financial
institutions. However, many times it happened that sufficient amount of fund is not raised from
the banks. In such kind of condition crowd funding is the one of the approach through which
sufficient amount of fund can be raised by the business firm. However, raising of fund is not
always easy task through crowd funding. This is because many entrepreneurs listed their projects
on relevant website but investors prefer to view few of websites. Due to this reason many times
entrepreneurs does not received any fund from the mentioned source of finance. It can be said
that it is the very risky source of finance.

TABLE OF CONTENTS
CHAPTER 1: INTRODUCTION....................................................................................................3
1.1 Background of the study........................................................................................................3
1.2 Research aims and objectives................................................................................................3
1.3 Research questions.................................................................................................................4
1.4 Significance of the study.......................................................................................................4
1.5 Rationale of the study............................................................................................................4
1.6 Dissertation chapters..............................................................................................................4
CHAPTER 2: LITERATURE REVIEW.........................................................................................6
2.1 Introduction............................................................................................................................6
2.2 Concept of crowd funding and its significance.....................................................................6
2.3 Contribution of crowdfunding in the growth of start-up business.........................................7
CHAPTER 3: RESEARCH METHODOLOGY...........................................................................10
3.1 Introduction..........................................................................................................................10
3.2 Research design or type.......................................................................................................10
3.3 Research approach...............................................................................................................11
3.4 Research philosophy............................................................................................................11
3.5 Data collection.....................................................................................................................11
3.6 Sampling..............................................................................................................................12
3.7 Data analysis........................................................................................................................12
3.8 Reliability and validity........................................................................................................13
3.9 Ethical considerations..........................................................................................................13
3.10 Research limitations...........................................................................................................13
CHAPTER 4: DATA ANALYSIS AND FINDINGS...................................................................15

CHAPTER 5: CONCLUSION AND RECOMMENDATIONS...................................................22
5.1 Conclusion...........................................................................................................................22
5.2 Recommendations................................................................................................................23
REFERENCES..............................................................................................................................25

CHAPTER 1: INTRODUCTION
Topic: To analyze the extent to which crowd funding assist start-up business to grow and turns
into multi million business
1.1 Background of the study
Crowd funding may be defined as a practice of raising fund for a project or venture
through large number of people. It is the most effectual alternative sources of finance which in
turn helps entrepreneur in meeting their monetary needs. Process in relation to raising finance via
crowd funding is often performed through internet mediated registries. In addition to this, crowd
funding model is mainly based on three types of actors such as project initiator, group of
individuals and moderating organizations. In the recent times, such source offinance has been
used to offer monetary assistance to wide range of creative and profitable projects. Such source
of finance places high level of emphasis on entrepreneurship and funding community oriented
social projects. Hence, crowd funding has created opportunity for entrepreneurs to raise money
to their desired level from people who are willing to invest. In this, report will shed light on
themanner in which crowd funding source provides high level of assistance to the entrepreneur
and business entities of new start-up in realizing their ideas.
1.2 Research aims and objectives
Aim of the present research or study is to assess thelevel of contribution made by crowd
funding in the growth of small start-up businesses.By considering such aim following objectives
have been draftedby the researcher:
 To develop understanding about crowd funding source of finance.
 To investigate the manner in which crowd funding source helps in meeting monetary
requirements.
 To evaluate the level of association takes place between crowd funding and growth of
start-ups.
 To recommend the ways through which growth and success level of start-ups can be
maximizedthrough the means of crowdfunding.

1.3 Research questions
For doing investigation more effectively and efficiently researcher is required to frame
suitable questions. Hence, in accordance with the aims and objectives, scholar hasframed
following questions:
Q.1 What is crowd funding?
Q.2 How crowd funding contributes in the growth of start up business?
1.4 Significance of the study
Study related to crowd funding is highly significant which in turn helps other scholars in
doing investigation effectually. Moreover, it helps them in gaining deeper insight about the
aspects of crowdfunding. Thus, by developing better understanding regarding this other scholars
would become able to conduct investigation in the right direction. Besides this, such
investigation and its outcome will also develop better understanding among theentrepreneurs
regarding the new sources of finance such as crowd funding. Thus, by getting deeper insight
about such element or sources of financestart-ups would become able to meet their monetary
requirements. All such aspects clearly present that study and its outcomes are highly important
which in turn helps researcher in doing research in an appropriate manner.
1.5 Rationale of the study
The main reasons behind conducting such investigation or research are to highlight the
significance of crowd funding source. Moreover, business entity of start-ups faces difficulty in
raising fund. Thus, it is the main issues which is facing by entrepreneur now a days. In this, such
study clearly depicts the manner in which crowd funding source offers monetary support to the
business entities of new start-ups.
1.6 Dissertation chapters
Chapter 1: Introduction
Under introductory section, scholar presents brief overview of study in relation to crowd
funding. Besides this, scholar also frames research aims as well as objectives in this chapterby
considering the aims and objectives. Besides this, researcher also mentions significance and
rationale behind conducting investigation.

Chapter 2: Literature review
In this chapter, researcher makes assessment of books, journals and scholarly articles by
presenting both positive and negative aspects related to crowd funding. Thus, researcher prepares
brief thesis in this section which in turn helps in analyzing data set more effectually.
Chapter 3: Methodology section
In the 3rd chapter of dissertation, researcheridentifies and thereby mentions tools that help
in assessing the level to which crowdfunding contributes in the growth of small sized business.
This section provides indication to the researcher during whole study.
Chapter 4: Data evaluation, findings and presentation
This chapter of thesis presents the manner in which datahas been analyzed by the
scholar. In order to determine the level to which crowd fundingis the best solution for small
business segmentresearcher has prepared themes by considering questionnaire. Besides this,
researcher has also presented graphs in this section with the motive to develop or facilitatebetter
understanding about area.
Chapter 5: Conclusion and recommendations
Final chapter of dissertation presents conclusion derived from overall investigation or
research. Besides this, researcher will also recommend the ways through which small start-ups
can meet their monetary needs or requirements.

CHAPTER 2: LITERATURE REVIEW
2.1 Introduction
Literature review may be defined as process in which scholar makes assessment of varied
data sources which is highly related to the research issue.Hence, in this section of dissertation
brief thesis has been prepared by the researcher throughevaluating the positive and negative
aspects related to crowd funding&start-p businesses (Ley, 2009). Brief thesis which is prepared
by the researcher in this section helps in making analysis of qualitative data set in the best
possible way.
2.2 Concept of crowd funding and its significance
According to the views of Mollick (2014)crowd funding may be served as a new way or
method of financing which in turn enables entrepreneurs to convert their business ideas into
reality. Moreover, each business entity or entrepreneur has some unique ideas and plan but due
to the lack of having enough financial resources it is not possible forthem to achieve success. In
this regard,by raising funds from large number of people over internet business entity can meet
financial needs to a great extent. Further, Belleflamme, Lambert and Schwienbacher
(2014)defined crowdfunding as the efforts which are made by the entrepreneursto get funds from
large number of individual via internet. In the case of crowdfunding entrepreneurs raise their
fund or finance without including any financial intermediaries. In addition to this, Agrawal,
Catalini and Goldfarb (2014)said that crowdfunding is used by business entities for marketing
purpose.By taking into account crowdfunding helps in creating interest for new projects. It is
highly significant which in turn helps business entity in gaining and sustaining competitive edge
over others (Kappel, 2009). Besides this, media also follows crowdfunding campaign which in
turn helps in enhancing the popularity of projects to the large extent.
Gerber, Hui and Kuo (2012)mentioned in their study that there are mainly four models
related to crowdfunding.On the basis of this aspect, some entrepreneurs follow patronage model
for meeting the specified goals and objectives. By considering the first model, it can be said that
funders are placed in the situation of philanthropists because they do notexpect or demand for
direct donations in against to the investment made. Along with this, Ahlers and et.al.,

(2015)depicted second model as lending one.Hence, in this,investors offer monetary support to
entrepreneurs in the form of loan. Thus, investors expect higher or some rate of return in against
to the money invested by them.On the other side, Elliot (2016)depicted third model as reward
based crowdfundingin which funders receive some benefits. In reward based funding, funders are
treated or considered as early customers. Hence, such approach enables funders toget access of
products initially which are produced from funded projects (Cohn, 2012). Thus, some special
benefits are attained by funders in the case of reward based crowd funding in terms of better
price etc. Early selling of products to the funders is one of the main aspects of reward based
crowdfunding. On the contrary to it, Drover and et.al., (2017)stated thatfunders are also treated
as investors sometimes. Fourth model of crowdfunding highly supports such aspect that crowd
funders are recognized as investors.However, on the critical note, Belleflamme and Lambert
(2016)identified that equity crowdfundingis the subject of following highly strict rules and
regulations. Besides this, lack of prestige is another main aspect that affectsthe significance level
of crowdfunding source. Moreover, if business entity fails to offer higher returns to the
stakeholders of funders then it places negative impact on the image ofconcerned business entity
(Kappel, 2008). This in turn also creates difficulty in generating funds in the near future and
thereby affects organizational growth.
2.3 Contribution of crowdfunding in the growth of start-up business
By conducting study, Sorenson and et.al., (2016)found that crowdfunding is the fast and
most effectual ways which in turn helps in raising funds or finance significantly. Besides this,
such source of finance offers monetary assistance with no upfront fees. Moreover, in the case of
crowdfunding entrepreneur is not required tomake payment of any fees due to the absence of
having financial intermediaries. However, on the critical note, Davis and et.al., (2017)said that it
is not possiblein the case of all projects to raise finance through the means of crowdfunding. It is
one of the main aspects which in turn limit the significanceof such financial source. Besides this,
Calic and Mosakowski (2016)assessed that crowdfunding is the most suitable or valuable form
of marketing which in turn helps in getting the attention of media to a great extent. Moreover, by
circulating information aboutproject through the means of online platform business entity can
approach to the large number of individuals. However, it is to be critically evaluated by
Greenberg and Mollick (2017)that business entity requires high level of resources such as money
and time for building as well as raising the interest level of individuals before the project

launches. Thus, in the lack of having enough resources it is not possible for the sole trade to get
high level of benefits from such source.
Short and et.al., (2017)has presented in their findings that by sharing business
ideathrough the online means business entity can take advice of experts. It shows that
crowdfunding source offers opportunity to the business entity in relation to making
improvements. Besides this, it also provides high level of assistance to the business entity in
testing the public reactions regarding the product or service which is going to be
introduced.Thus, if individuals react positively on product or service then it is good indicator. On
the other side, Drover and et.al., (2017) claimed that if business ideas are not secured by
theentrepreneurs through the means of copyright or then there is possibility that other individuals
will steal unique ideas from the site of crowdfunding.
Davis and et.al., (2017)investigated that crowdfunding enables business entities or
entrepreneur to convert their unique ideas into profitable business. Sometimes, banks and other
financial institutions deny giving loan for some projects due to having strict rules and guidelines.
It is the main reasons due to whichcreative projects of stakeholders remain on paper. In this
regard, crowdfunding encourages entrepreneur to leverage their ideas and thereby attain success
in the competitive business environment. However, on the critical note, Short and et.al.,
(2017)stated that in the case of crowdfunding success ratio is very low. Moreover, out of 100
project only 1 or 2 projects of business entity attains success in relation togetting funds from
general public. From assessment, it has been identified by McKenny and et.al.,
(2017)thatcrowdfunding facilitates market validation to a great extent. In addition to
this,crowdfunding works best when fund is required for relatively small projects. Moreover, in
the case of large sized investment funders have high level risk regarding the security of money
(Lawton and Marom, 2012). Thus, business entity can encourage personnel or investors in
relation to investing money in the concerned project more effectually.
On the other side, Butticè, Colombo and Wright (2017) examined that crowdfunding
option hedges risk to the significant level. Moreover, it is highly difficult for an entrepreneur to
start and attain success in business due to having challenging conditions. Further, assessment of
sufficient funding, challenges in market validation etc is the main aspects which in turn highly
influence the growth and success of new start-ups. Thus, by launching a crowdfunding campaign

provides high level of assistance tobusiness entity is avoiding such risk level. Moreover, it helps
business entity in gaining valuable learning experience (Ward and Ramachandran, 2010). It
enables sole trader to avoid giving up equity before going all out. Thus, it helps entrepreneur in
taking a product concept to market in an effectual way.However, Parhankangas and Renko
(2017)argued that potential lawsuits are one of the main aspects which in turn closely affect the
significance of crowdfunding. The reason behind this, with the motive to earn high return
investors laid high level of emphasis on investing money ingrowing as well as profitable venture
(Fang, 2008). Thus, investors become impatient when business unit generates less profitbecause
earning higher return from investment is the main motives of them. Thus, there is possibility
thatfunders or investor will sue on entrepreneur in relation to fraud, breach of contract and
mismanagement (Hazen, 2011).By considering such aspect, it can be presented that in the case of
crowdfunding there is impossibility that investors will file complaint in against to the business
entity.
Along with this, Gerber, Hui and Kuo (2012)has evaluated that crowdfunding facilitates
brainstorming to a great extent. Moreover, in this, entrepreneur is in position to encourage
individuals and thereby receives comments, feedbacks and ideas through engaging crowd.
Hence, feedbacks provided by the individuals arehighly valuable and important (Cosh, Cumming
and Hughes, 2009). Moreover, feedback system enables business entity to understand some
aspects of business on which entrepreneur had not placed emphasis before. This aspect shows
that crowdfunding source enables business entity to develop highly sound or competent business
plan which in turn helps in achieving success. Lawton and Marom (2012)analyzed in their study
that crowdfunding places negative impact on future financing options. Moreover, in the case of
crowdfunding company is filledwith inexperienced and less competent shareholders, Thus, such
aspect closely influences the decision making aspect of angel investors and venture capitalists.

CHAPTER 3: RESEARCH METHODOLOGY
3.1 Introduction
Research methodology entails tools and techniques that are undertaken by the researcher
to resolve specific issue or problem. It depicts systematic and theoreticalplan that researcher
undertakes for evaluating and analyzing research issue (Chilisa, 2011). Section of research
methodology is highly significant whichexhibitsmethods that have been used by the researcher.
Hence, with themotive to assess the contribution of crowdfundingin the growth and success start-
up business several tools has been adopted by the researcher.
3.2 Research design or type
In the field of research, research type can be distinguished in two terms such as
qualitative andquantitative. For conducting study in an appropriate manner and right direction it
is highly required for the scholar to select suitable research type. The main reasons behind this,
selection of other techniques such as data collection, analysis, approaches and philosophies are
highly influences from the type of research (Petty, Thomson and Stew, 2012). Thus, scholar is
required to carefully select type of the research by taking into account issue or problem which is
going to be investigated. Qualitative research assists in analyzinginformation which is in non-
numerical format (Schmitt, 2010). Thus, qualitative research provides high level of assistance to
the scholar in understanding research issue and associatedcauses more effectually. By conducting
such kind of investigation or research scholar can develop hypothesis for the upcoming time
period (Coleman and Ringrose,2013). On the other side, in the case of quantitative study scholar
determines or presents solution bymaking assessment of numeric facts and figures. Hence, such
study is appropriate where large number of respondents and descriptive findings need to be
analyzed.
In thepresent research,to evaluate the contribution of crowdfunding in the growth of start-
up business qualitative research design has been selected. Hence, by making assessment of
qualitative aspects regarding crowdfunding solution of research has been found and presented by
the researcher.

3.3 Research approach
Approaches of research can be divided into two types such as inductive and deductive.
Hence, by considering the nature of study or investigation scholar can select suitableresearch
approach. Moreover, selection of research approach is highly based on the type of investigation
selected. In the case of inductive approach, researcher lays high level of emphasis on the
generalizationof new theoretical framework (Zhang, 2013). Such approach of research offers
suitable solution only when qualitative investigation is undertaken. In contrast to this, deductive
approach of research or study assists in testing the validity of assumptions or theories. Hence, by
usingdeductive approach quantitative issues can be resolved in the best possible way. In this,
inductive approach of research has been selected by the scholarreferring the type of investigation
such as qualitative. Thus, in this, high level of emphasis has been placed by the researcher on
the development of new theoretical framework regarding crowd funding and the success of start-
up business.
3.4 Research philosophy
Philosophies of research such as interpretivism and positivism are highly significant
which in turn provides direction to the scholarin making selection of data collection and analysis
technique. In the area of research, selection of philosophy is highly influences from the type of
study.Interpretivism philosophy gives better outcome when qualitative investigation is conducted
(Drake and Heath, 2010). In this, solution of issue is determined by the researcher through
interpreting the views of respondents on the basis of existing frameworks. On the other side,
positivism philosophy is suitable when type of research is quantitative and numeric data set
needs to be analyzed. With the aim to assess the extent to which crowd funding makes vital
contribution in the success of new start-ups interpretivism philosophy has been selected. Thus,
by interpreting the qualitative data setresearcher has presented the level to which crowd funding
is the best solution for new start-ups or businesses.
3.5 Data collection
Data is the main inputs in research which in turn helps scholar in presenting the fair and
suitable view of study. By taking into account two sources such as primary and secondary
suitable data can be gathered by the researcher. In research, primary data set implies for the one
that is collected first time by scholar to resolve issue. Survey, observation, focus group etc. Are

the most effectual methods which in turn help in gathering primary data. Apart from this,data
which is generated through the means of books, scholarly articles and journals considered as
secondary (Hodkinson and Macleod, 2010). Moreover, books, journals present the findings
determined by other scholars. Thus, to carry out study in a highly structured manner books and
journals related to crowd funding & new start-ups also have been evaluated by the researcher to
prepare brief thesis regarding study. By undertaking this, researcher has analyzed case study in
an effectual way.
3.6 Data analysis
Effectiveness and reliability of outcome is highly influences from the technique which is
undertaken for making analysis and evaluation of data set. Techniques for data analysis are
highly varied in accordance with the type of research or study. Basically, SPSS and thematic
perception test are the most two suitable techniques which in turn assists in presenting suitable
solution of issue (Zivkovic, 2012).However, SPSS techniques such as chi-square, regression,
descriptive statistics etc helps in deriving suitable solution when numeric facts are analyzed. On
the other hand, thematic perception test technique presents better results only when qualitative
aspects are investigated. In the present research, qualitative research design has been selected to
evaluate the association takes place between crowd funding and start-ups growth. By keeping the
nature of study in mind thematic perception test technique has been chosen. Thus, by preparing
several themes related to crowd fundingsolution of issue has been presented by the researcher.
3.7 Reliability and validity
For making study highly reliable and valid data has been gathered by the scholar from
highly authentic sources. Researcher has assessed and evaluated sourcesrelated to crowd funding
and growth of new start-ups.In addition to this,latest data sources published after 2007 have been
used by the researcher. Moreover, recently published articles serve highly reliable informationas
compared to past studies (Zikmund and et.al.,2013). Besides this, data sources protected through
the means of copyright has been undertaken by the researcher. Moreover, highly protected data
sources offer reliable solution about problem or issue. All these aspects clearly show that high
level of reliability and validity has been maintained by the scholar in study.

3.8 Ethical considerations
Ethical aspects are the main parts of study which in turn raises its significance to a great
extent.Hence, for giving credit to author proper citation of related source has been done. Besides
this, all theinformation has properly been rephrased by the researcher rather than copied.
3.9 Research limitations
In the present study, some issues are prevailed which in turn closely influences its
significance level. To assess the suitable solution of issue 4 case studies have been selected due
to time constraint. It is the limitation because when researcher conducts study of more case
studies then they would become able to present the fair view of issue which is going to be
investigated. Hence, by considering such aspects researcher has selected specific case studies
which in turn help in assessing the impact of crowd funding on organizational growth. Besides
this, due to the lack of having enough resources high tech tools are not undertaken by the
researcher for data analysis. Thus, by keeping such aspect in mind researcher has conducted
thematic analysis which in turn highly suits to the qualitative investigation. In this way, by
taking strategic action researcher has presented the best outcome from issue.

CHAPTER 4: UNDERSTANDING FIGURES AND INTERPRETATION
Data analysisis the one of the mainpart of dissertation clearly reflects findings through
the means of chart and graphs. In the present case, to evaluate the contribution of crowd funding
in the growth of start-ups thematic perception test technique has been employed by the
researcher. On the basis of this aspect, by preparing themes considering questionnaire findings
have been presented by researcher. Along wit
h this, all the findings also have clearly been supported through thesis prepared in literature
review section. Thus, by presenting graphs and interpreting the views of respondents such as 30
entrepreneursfindings have been presented by the researcher.
Case study 1
As per case study, most of entrepreneurs have deep knowledge about the crowd funding.
It can be said that majority of people know about crowd funding. This is because usually people
face a lots of problems in funding their business project. In starting stage it is very difficult task
to arrange finance from banks and other financial institutions. Through crowd funding one obtain
an alternative source of finance for the business. Thus, majority of respondents know about the
mentioned source of finance and there are large number of entrepreneurs that are availing
benefits of the crowd funding in their business. It can be seen that most of respondents think that
success rate of crowd funding is very low (Case studies, 2017). This means that if any investor is
going to invest in the business firm under crowd funding then mostly same face loss in
transaction. Thus, success rate is very low in crowd funding. This happened because those that
apply for funds through crowd funding are not highly experienced people and even they make
good business plan are not able to foresee future time period. Hence, such kind of entrepreneurs
make wrong decisions. Due to this reason investors that make an investment face heavy loss on
investment.
Case study 2
As per the studied case Results are clearly crowd funding to large extent help
entrepreneurs in enhancing their business at rapid rate. Overall statistics that are reflected by case
study clearly revealed that ,majority of respondents have an opinion that they are strongly agree

and agree with the fact that crowd funding help them in funding of business operations. There is
no reason that is available to the entrepreneurs for thinking inverse of this. Such kind of
perception is formed among entrepreneur because in case bank does not fund their project crowd
funding is the alternative source of finance that is available to them.It can be said that crowd
funding to large extent help entrepreneurs in funding their business. Those who are interested in
specific project or think that investment must be made in same invest their capital in the
business. It can be said that crowd funding to large extent help firms in financing their projects.
Most of entrepreneurs believed that probability of sealing of business idea is high in case crowd
funding. This is because anyone who wants to make investment in the firm can view details that
are uploaded on the internet. Thus, one can take idea from internet and can start its own business
venture (Why crow funding campaigns succeed 10 case studies from the best crowd funding
websites, 2015). It can be said thatthere is probability that business idea can be stolen in case of
crowd funding. It can be said that raising finance through crowed funding is risky. Thus, one
must cautiously upload business idea details on the internet. One must use crowd funding as a
source of finance only when there is no alternative source of finance available to the business
firm. As per case study, one instead of uploading entire details of project must give brief
snapshot and must personally meet with the interested investor.
Case study 3
Case study that is analysed is reflecting that crowd funding sometimes put negative
impact on the future financing options. Entrepreneurs have common perception in respect to
same because many times firm receive funds from the investors but failed to make best use of
same. This create negative image of the firm among the investors and due to this reason some
times it become hard for the firms to raise big amount of fund through IPO. There is high
probability that law suites may be observed in case of crowd funding. Most of entrepreneurs
think that there is high probability of lawsuits because many times investors expect specific
return from the project owner and when they receive very less percentage return then think that
they are cheated by the project owner and sue him. Such kind of incidents tarnish firm image
among the investors and stakeholders. Due to this reason firm face a lots of problems in its
business. It is the responsibility of the business firm to give sufficient return to the investors
because they make heavy investment in the firm by using personal savings and loan that they
take from the banks (Walker, 2016). Firms must consider these investors as their key

stakeholders because they make investment in the firm and have interest in same. These
stakeholders can give valuable suggestions to the business firm in respect to business operations
if they have any business management related experience. In this way it can be ensured that
investors are well aware about all business conditions and they got an opportunity in the
management decision making process. By doing so it can be ensured that there will be no legal
actions from side of investors against the firm.
Case study 4
As per case study, entrepreneurs strongly believe that use of crowd hedge fund protect
them from risk. It can be said that use of crowd fund hedge firm from risks. Overall conclusion
is that most of entrepreneurs think that crowd fund hedge firm from risk because many times
sufficient amount is not received as bank loan then in that case through crowd fund finance is
arranged in sufficient amount and by doing so business is operated smoothly.There is common
opinion among entrepreneurs that they must resort to crowd funding then bank loan. This is
because currently economic conditions of the nations are uncertain and due to this reason banks
are less interested in giving loans to the business firms (Becky., 2016). As in past years number
of cases of defaulters comes in existence as banks failed to recover debt amount on time from the
debtors. Thus, in current time period banks are following cautious approach and under this they
are giving debt only to few firms that have good track record and high credit worthiness. Thus, in
such kind of situation those that intends to open new business cannot obtain debt easily from
banks. Hence, crowd funding is the only alternative that firms have currently. Thus, it can be said
that crowd fund hedge firm from risks.

CHAPTER 5: CONCLUSION AND RECOMMENDATIONS
5.1 Conclusion
On the basis of above discussion it is concluded that crowd funding is the one of the most
important approach through number of business firms raise huge amount of fund for their
business. It can be observed that usually funds are raised from the banks and other financial
institutions. However, many times it happened that sufficient amount of fund is not raised from
the banks. In such kind of condition crowd funding is the one of the approach through which
sufficient amount of fund can be raised by the business firm. However, raising of fund is not
always easy task through crowd funding. This is because many entrepreneurs listed their projects
on relevant website but investors prefer to view few of websites. Due to this reason many times
entrepreneurs does not received any fund from the mentioned source of finance. It can be said
that it is the very risky source of finance. Extent to which firm received funds from the investors
depends on the opinion that they have towards the project. To large extent crowd fund hedge
firm from the risks that is it exposed to. This is because entrepreneur is new to business and due
to this reason it have less reliability among banks and other financial institutions. Hence, either
entrepreneur failed to raise funds from banks or if it raised then same is not sufficient. In such
kind of situation it is very important to raise funds from the crowd funding. Raising of amount
from the mentioned source of finance ensured that there will be no scarcity of funds in the
business. However, there are some issues that are associated with the mentioned source of
finance. One of them is that investors have some expectation in terms of profit or return from the
entrepreneur. Sometime entrepreneur failed to deliver that particular expected result. In such
kind of situation investor file a case against the firm. When such incidents happened negative
image of the firm is created among the investors. In that situation stakeholder’s confidence on
the firm reduced to great extent and it received less support from the relevant entity. Due to this
reason business operations of the firm get deteriorate and it face loss in its business. Thus, it is
very important to ensure that it is already cleared to the investors that there is probability that
same can earn less amount of return on the investment. Thus, by doing so origination of such
kind of conditions can be prevented to some extent. There is another probability that information
related to the proposed project can be copied by any person and same can be used by other

person to open its business. It is illegal to use such kind of acts. Number of steps must be taken
by an individual to ensure that its identity is hidden from the approach of wrong people. It can be
said that there are number of positive or negative points that are associated with crowd financing.
5.2 Recommendations
On the basis of above discussion it is recommended that when any investor communicate
that it wants to make investment in the firm then project owner must communicate to the investor
that huge amount of profit can be earned on the project and there is also a probability that less
return can be generated by the project. Thus, investor must be prepared for both positive and
negative results. This is because any sort of results can be obtained if investment is made in the
project. It is also recommended that project owner must not share entire project related details on
the internet. Instead of doing so it must explain project briefly and must communicate sore core
strengths of the project. All project related details must be communicated to individual when
same is prepared to make investment in the firm. By doing so it can be ensured that project
details will be in safe hands and same is not inn hand of unauthorized person. It is also
recommended that project report must be prepared in systematic manner so that business can be
presented in effective way in front of the investors. Specific approach must be followed in order
to ensure that project is evaluated in proper manner and after considering number of factors its
viability is measured.

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