Question

Group Project - “Raising capital through Crowdfunding” This project is worth 30% of your total grade. The objective of this project is for each group to analyze the mechanism of crowdfunding, which has become popular as a major source of worldwide financing, especially for start-up businesses. Crowdfunding combines the best of crowd sourcing and micro-financing, bringing together various individuals who commit money to projects and companies they want to support. It’s a young and quickly growing market and it's transforming how people behave with their money. It's also transforming the ways businesses raise capital. OBJECTIVE The main objective of this group project is to encourage students to carry out research into an exciting, current topic which could not be covered in the classroom. EXPECTED OUTCOME Students would be exposed to non-conventional capital markets, crowdfunding, which is becoming popular as a major source of worldwide financing, especially for start-up businesses. TASK 1 | Page Group Project 4 To 6 Select a country that is practicing CROWDFUNDING and prepare a report on their policy and mechanism of CROWDFUNDING in details in a proper format. Assignment Report Structure TABLE OF CONTENTS 1. Executive Summary 2. Introduction 3. Models of crowdfunding a. Reward-based crowdfunding b. Equity crowdfunding c. Software value token d. Debt-based crowdfunding e. Litigation f. Donation Based 4. Role of crowdfunding 5. Platforms 6. Significant Campaigns 7. Controversies of crowdfunding 8. Application of crowdfunding 9. Benefits and risks of crowdfunding 10.Reflection 11. Conclusion and Recommendation SUBMISSION INFORMATION The assignment must be completed by week 12 and all the members must present the report in PowerPoint format. . Please type the report in Times Roman 12/ Ariel 11 font, 1.5 - space with numbered pages – The report should be a minimum of 20 slides. There is no limit to the Appendix. This necessarily requires that the source of information be cited. Page 2 of 3 RULES AND REGULATIONS • You are assigned to complete this assignment as a group of maximum 4 to 6 students. • You must write the assignment based on real information. • Before submission, ensure that you have carefully edited your work. Poorly edited / shoddy work will be heavily penalized. Other technicalities All the members of a group are required to contribute equally. If the contribution of the members is considerably unequal, you can agree on a different weighting scheme that reflects the contributions of each member. Lacking agreement, you will be asked to provide me with the details of each member’s contribution in writing, and I will decide the weights. Late submission will be penalized.

Answer 1

Crowdfunding refers to raising a small amount of money from a large number of people to finance a project, cause or business, generally via the internet. This approach taps into the collective efforts of a large pool of individuals primarily online via social media and crowdfunding platforms and leverages their networks for greater reach and exposure.
Crowdfunding platforms, on the other hand, turns that funnel on-end. By giving us, the entrepreneur, a single platform to build, showcase, and share our pitch resources, this approach dramatically streamlines the traditional model.With crowdfunding, it’s much easier for you to get your opportunity in front of more interested parties and give them more ways to help grow your business, from investing thousands in exchange for equity to contributing $20 in exchange for a first-run product or other reward.

Types Of Crowdfunding:-
1) Donation Based Crowdfunding:- In this crowdfunding there is no financial return to the investors or contributors as donation-based crowdfunding. Common donation-based crowdfunding initiatives include fundraising for disaster relief, charities, nonprofits, and medical bills.

2) Rewards Based Crowdfunding:- Rewards-based crowdfunding involves individuals contributing to your business in exchange for a “reward,” typically a form of the product or service your company offers. Even though this method offers backers a reward, it’s still generally considered a subset of donation-based crowdfunding since there is no financial or equity return. This approach is a popular option here on Fundable, as well other popular crowdfunding platforms like Kickstarter and Indiegogo, because it lets business-owners incentivize their contributor without incurring much extra expense or selling ownership stake.

3) Equity based Crowdfunding:- Unlike the donation-based and rewards-based methods, equity-based crowdfunding allows contributors to become part-owners of the company by trading capital for equity shares. As equity owners, our contributors receive a financial return on our investment and ultimately receive a share of the profits in the form of a dividend or distribution.

4) Debt Crowdfunding:- Also known as peer-to-peer lending or P2P, debt crowdfunding is where individuals lend money to startups or individuals and expect to be repaid with interest. It is just like borrowing money from a bank in which the investor gets repaid with interest at a certain point of time. It is the most common way for startups to raise money to set up their business.