Crowdfunding seems efficient for individual, retail financing (e.g. fundrasing for a project).
How could a company use only web-technology for its Corporate Finance actions (e.g. new Bond and Stock emission, for liability and equity financing)?
How could the services of an Investment Bank offered to a company be provided merely via the Web (e.g. syndication, IPO, etc.)?
Hi, Eugenio:
Over the past few years, the area of entrepreneurship has grown significantly and with this growth, there has developed a new realm of funding: crowdfunding. Crowdfunding allows individuals to source their funding from a various amount of individuals from platforms that can be found from the internet. This type of funding can be traced back to the early 1700's and is continuing to evolve ever since its inception as microfinancing. As crowdfunding continues to evolve, it only becomes larger and more successful with projects raising millions of dollars and products being shipped worldwide. This type of financing is not only reserved for business projects, some platforms allow people to fund charities and allow these crowd funders to give back to society.
Moreover, the lack of funding, and limited access to it are the basic problems faced by small and medium-sized enterprises (SMEs). Given the great role and importance of SMEs in every national economy, any progress in solving these problems in terms of creating and finding alternative sources of funding should attract great attention in both professional and scientific and the wider socio-political communities.
So perhaps the answer to your question...Corporate Finance be operated merely with Crowdfunding...is Yes!
Please take a look a the two recent research studies (Golic, 2014; Bradley & Loung, 2014) ). The author argued that the crowdfunding is an innovative and relatively new concept that connects entrepreneurs and investors through the Internet. This method allows the entrepreneurs to collect funds through the Internet by "open invitation" to finance their projects/ventures and thus raise the necessary funds by relatively small contributions of a relatively large number of investors. As such, crowdfunding is a fast-growing model increasingly debated of in academic circles and the European institutions. The author considered crowdfunding as an alternative means of financing SMEs and tried to give different aspects of crowdfunding - and explained how it works, what are the advantages of using it for SMEs and thus expanded the knowledge on the topic!
- Golić, Z. (2014). ADVANTAGES OF CROWDFUNDING AS AN ALTERNATIVE SOURCE OF FINANCING OF SMALL AND MEDIUM-SIZED ENTERPRISES. Zbornik Radova Ekonomskog Fakulteta U Istocnom Sarajevu, (8), 39-48.
- Bradley III, D. B., & Luong, C. (2014). CROWDFUNDING: A NEW OPPORTUNITY FOR SMALL BUSINESS AND ENTREPRENEURSHIP. Entrepreneurial Executive, 1995-104.
Hope this helps!
Nadeem
It is a very interesting issue you mention, but has yet a long way to pass. Crowdfunding is a still developing financial innovation and in order to be expanded requires a whole new regulatory framework so as to work properly and minimize the potential risks. Of course it is the future, but the use of Internet solely for such major issues is very perilous.
Check the followinf papers for reference:
Crowdfunding: Tapping the right crowd
P Belleflamme, T Lambert, A Schwienbacher - Journal of Business …, 2014 - Elsevier
The dynamics of crowdfunding: An exploratory study
E Mollick - Journal of Business Venturing, 2014 - Elsevier
Crowdfunding of small entrepreneurial ventures
A Schwienbacher, B Larralde - … OF ENTREPRENEURIAL FINANCE …, 2010 - papers.ssrn.com
I think that crowfunfing campaigns may help entrepreneurs to obtain feedback on their market demand and may complement the financing needs of the young firm. But the idea underpinning the firm's project may be replicated quickly by others, if revealed on a platform. Moreover, the presence on platforms of professional investors (venture capitalists) reduces the entrepreneur's incentives to undertake a crowfunding campaign.. Perhaps the optimal funding structure turns out to be a mix of crowfunding and professionnal investors financing schemes.
- Badges
- Science topic