Comparative analysis of the ways crowdfunding is promoted

Sima Jegeleviciute, Loreta Valanciene

Abstract


Crowdfunding is defined as a new method of financing, based on an intermediary (internet platform), which links backers / investors, who are ordinary people willing to invest small amounts into favourable projects, to entrepreneurs / startups, which usually represent brave new ideas and have problems with attracting finance using other ways. Crowdfunding is believed to be beneficial not only for backers / investors and entrepreneurs / startups, but also for governments and economy. It is expected to foster economic recovery, create jobs and foster innovations. In order to take advantage of these benefits, governments seek for ways to promote crowdfunding. These ways differ because crowdfunding is a novelty and there is no one proven, right way to do that. Also, as regions differ by their business culture, altitude towards risk, and intensity of using crowdfunding, the means they choose for promoting crowdfunding vary as well. Due to those reasons, it is interesting from the scientific perspective to take a look at the strategies different countries adopt to promote crowdfunding.

Purpose. The paper aims to describe and compare the ways crowdfunding is fostered.

Methodology. In order to fulfil the purpose, a literature review on promoting crowdfunding is performed. An overview of legal acts and the situation of crowdfunding in different countries, including applied crowdfunding models, is provided. The ways of what should be done in order to promote crowdfunding are outlined according to the recent research by the European Crowdfunding Network. Such elements as creating a legal framework for crowdfunding, explaining how crowdfunding works, supporting a quality label for intermediaries, protecting investors / contributors, promoting successful crowdfunding cases, creating an overview of good crowdfunding platforms and etc. are described. The data, collected during the literature review, is grouped accordingly. Such methodology allows outlining certain activities that should be and are employed in order to foster crowdfunding and comparing the efforts different countries put to do that.

Results. The main result of this paper is a description of what different countries do to promote crowdfunding and a comparison of their chosen means.

The theoretical contribution. The paper provides data on the ways crowdfunding is promoted. The provided comparative analysis allows identifying opportunities to foster crowdfunding which are not yet used in a certain country. Also, some insights about the influence of certain means to foster crowdfunding can be formulated.

Practical implications. The research could be useful for crowdfunding professional organizations, governments or even platforms which are interested in and seek for ways to make crowdfunding more popular. Also, the research might be interesting for entrepreneurs (startups) which have to make a choice of platform.

Keywords: entrepreneurs; crowdfunding; startups;

Paper type: Research paper.


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