Currently, and especially after the recent global financial crisis, it has become not easier for companies to get financial resources for their specific investments . In particular it is difficult to get conventional and traditional loans by banks to finance start ups or special and innovative projects of entrepreneurship. For this reason it is important to find new ways of financing. For this purpose, it seems useful, to modify the relatively new “Crowdfunding” mainly and so far used for financing artistic projects into an appropriate kind of corporate financing, called “CROWDINVESTING”. The following paper would theoretically develop the Crowdinvesting and encourage it to use in everyday business of SMEs .
Keywords: Crowdfunding, crowdinvesting, corporate finance, credit clamp, funding, lending, SME;
Table of Contents
1 Abstract
2 Introduction
3 The historical development of Crowdfunding as the origin of a reorientation for Crowdinvesting
4 Objective of the essay
5 Crowdfunding in Europe using the example of Germany
6 How does CF function as a pre-form of Crowdinvesting?
7 CROWDINVESTING, the further development of CROWDFUNDING
8 Clear easy to understand projects, innovation and the chance for unique characteristics
9 Customer Relationship
10 Summary, conclusion, perspective and chances for an unconventional new capital
Research Objectives and Key Topics
This paper aims to theoretically develop the concept of "Crowdinvesting" as a professionalized, internet-based financing alternative for small and medium-sized enterprises (SMEs) struggling with restrictive bank lending policies following the global financial crisis. By modifying the existing crowdfunding model, the research seeks to establish a sustainable and efficient framework that allows private "smart investors" to participate in corporate financing, ultimately bridging the gap between innovative start-ups and necessary capital.
- Evolution of Crowdfunding into Crowdinvesting for corporate use.
- Overcoming traditional bank credit constraints for SMEs.
- Structuring professional platforms for transparent, legal-based mini-investments.
- Enhancing investor engagement through interactive communication and "smart reporting".
- Economic impact of "folk stock" as a form of modern micro-financing.
Excerpt from the Book
The historical development of Crowdfunding as the origin of a reorientation for Crowdinvesting
From a historical point of view, Crowdfunding (CF) is a relatively recent term for a new form of loan financing in comparison to conventional means of financing. The term first emerged in the year 2000 in the USA and was developed during the course 2006 for instance as the internet platform‚ “sellaband.com” which enables artists to finance their music album in advance by fans themselves.
The developed finance form of CF was shaped, amongst others, by Jeff Rowe based on his initiated Crowdsourcing. The idea of CF fundamentally derives from creative artists. Crowdfunding is based on the collective merits of the cooperation of many people (the crowd), whose attention for certain actions and projects is awakened by the internet and who then make money for financing available beforehand by relying upon the advised success of the action or the project. The purpose of individual CF projects is multifaceted, from the support of creative projects (musical production), to political campaigns, to start-ups and then at the other end of the spectrum, to smaller entrepreneurial projects.
Summary of Chapters
1 Abstract: Provides a brief overview of the difficulties companies face in securing traditional loans and introduces Crowdinvesting as a necessary evolution of Crowdfunding.
2 Introduction: Discusses the persistent capital difficulties for SMEs after the financial crisis and posits Crowdinvesting as a way to counteract restrictive bank lending.
3 The historical development of Crowdfunding as the origin of a reorientation for Crowdinvesting: Traces the origins of Crowdfunding back to early US internet platforms and its roots in supporting creative projects.
4 Objective of the essay: Outlines the research intent to transform Crowdfunding principles into a professional, efficient instrument for corporate social responsibility and company financing.
5 Crowdfunding in Europe using the example of Germany: Examines the development of German CF platforms in 2010 and 2011, highlighting the potential for market growth.
6 How does CF function as a pre-form of Crowdinvesting?: Explains the "all-or-nothing" principle and how community interaction and rewards drive successful project financing.
7 CROWDINVESTING, the further development of CROWDFUNDING: Details the transition from artistic project funding to a non-bureaucratic, business-focused financing model for start-ups.
8 Clear easy to understand projects, innovation and the chance for unique characteristics: Emphasizes the importance of professional presentation, transparency, and clear legal structures for investment success.
9 Customer Relationship: Describes how platforms maintain ongoing investor engagement through "smart reporting" and interactive communication tools.
10 Summary, conclusion, perspective and chances for an unconventional new capital: Reiterates the potential of Crowdinvesting as a vital, professional alternative to classical financing if implemented with appropriate structure and transparency.
Keywords
Crowdfunding, Crowdinvesting, Corporate Finance, Credit Clamp, Funding, Lending, SME, Micro-financing, Folk Stock, Entrepreneurship, Start-ups, Smart Investors, Capital Acquisition, Financial Innovation, Crowd.
Frequently Asked Questions
What is the core subject of this paper?
The paper explores the evolution of Crowdfunding into a professional corporate financing model termed "Crowdinvesting," specifically designed for small and medium-sized enterprises.
What are the primary themes discussed?
Key themes include the failure of traditional banking systems for SMEs, the historical roots of crowd-based financing, and the technical and legal requirements for professionalizing Crowdinvesting platforms.
What is the central research goal?
The research goal is to demonstrate how Crowdfunding principles can be modified and scaled to provide an efficient, alternative source of capital for businesses that are currently underserved by traditional institutions.
What scientific methodology is utilized?
The work employs a theoretical development approach combined with case analysis, reviewing existing internet platforms in Germany and historical precedents to construct a framework for future Crowdinvesting operations.
What topics are covered in the main body of the text?
The main body examines the functional differences between classic Crowdfunding and Crowdinvesting, the roles of community and investors, legal structural requirements, and the necessity for "smart reporting" in customer relations.
Which keywords best characterize this work?
Important keywords include Crowdinvesting, SME financing, credit clamp, micro-financing, folk stock, and capital innovation.
How does the author define the "all-or-nothing" principle?
It is described as a critical lever for project success where funding is only released to the project initiator once 100% of the target budget has been collected from the community before a set deadline.
Why does the author advocate for professionalizing platform operators?
The author argues that current platforms are too simple; professional operators with business and legal expertise are needed to conduct coaching, ensure project viability, and legally protect crowd investors.
What is the author's stance on state regulation in this sector?
The author suggests that while some regulation is necessary to prevent misuse, it should be kept to a minimum to allow the "folk stock" spirit and creative investment market to grow dynamically.
- Arbeit zitieren
- Rainer Schenk (Autor:in), Prof. Dr. Ing. Elena Horska (Autor:in), 2012, Crowdinvesting , München, GRIN Verlag, https://www.grin.com/document/192959
