Crowdfunding industry—History, development, policies, and potential issues

Abstract

Crowdfunding has gained a great deal of attention from policy makers, researchers, and practitioners. This paper attempts to provide an overview of the history and development of the industry and discusses different types of crowdfunding and their public policies. It is identified that the operation of peer-to-peer lending and equitybased crowdfunding is regulated by the Financial Authority; the reward-based crowdfunding (RBC) and donation-based crowdfunding (DBC) is yet to be regulated, neither in the United Kingdom or United States. The lack of rules and regulations in the latter two models highlights the burning issues such as potential fraud and malpractice. Therefore, we suggest that it is timely to consider regulating the two types of crowdfunding possibly by governance mechanism with reporting requirements to keep track of the fund and to provide timely information. Additionally, it is advisable that practitioners to work on an agreed framework to establish industry standard, so potential investors can compare and assess the quality of projects easily. Finally, the management of crowdfunding platforms especially the RBC and DBC platforms should be improved. The ease of launching campaigns has made it difficult for both initiators and investors to succeed in the crowdfunding process. Further research to develop some form of assessment framework would be useful to both parties.

Crowdfunding for Independent Print Media: E-Commerce, Marketing, and Business Development

“…Every crowdfunding category offers different values for the involved stakeholders. With that in mind, it seems logical that each different industry, and even each different company, might choose a different crowdfunding approach [30,31,117].…”

A study of incentives in charitable fundraising

“…Fundraising through volunteers has in recent years taken the dimension of crowdfunding, and specifically "donation-based crowdfunding" (hereafter DBC, Zhao et al, 2019). According to Zhao et al (2019): "DBC allows fundraisers, primarily from social and cultural groups [. .…”

Breaking borders: Launching a regional literary journal in times of arts funding uncertainty

“…Crowdfunding emerged in the late 2000s as a way for entrepreneurs to seek private capital for their ventures. Zhao, Harris and Lam (2019) define crowdfunding as "the use of a crowd (crowdfunders) to raise funds via online platforms (crowdfunding platforms), in which individuals who are interested in the new project pledge a relatively small amount of capital to support the project" (p. 2). Anybody with a project or product in mind who seeks development funding can use a crowdfunding platform to try and raise funds for their idea.…”

“…Anybody with a project or product in mind who seeks development funding can use a crowdfunding platform to try and raise funds for their idea. American platform Indiegogo launched in 2008, followed by Kickstarter in 2009 (Zhao, Harris & Lam, 2019). Entrepreneurs or creators set a fundraising target and offer rewards to pledgers based on how much they contribute to the project.…”