This work paper occupies with the issue of crowd funding as a financial instrument, by considering all types of crowd funding. The literature differs between a donation-based, a reward-based, a debt-based, and an equity-based type, whereat the law requires different claims. NPO's usually make use of donation-based crowd funding systems, whereas start-up companies try to use the equity-based or debt-based type to make an investment more attractive to the crowd. The JOBS-act enables start-up companies to collect equity or debt through crowd funding by limiting the requirements for these kind of companies to facilitate them an easier access to the financial market. Up to now, many online in-termediaries use a gap in law to provide equity-based crowd funding by building up so called angel groups through the registration of crowd funder. This club enables them investing in crowd funding without respecting the current legal requirements. Summing up, start-up companies are dependent on crowd funding as they will not get equity through the common way by asking banks or investment companies for loans. Crowd funding is an excellent opportunity and way to transform business ideas into real life business.
Inhaltsverzeichnis (Table of Contents)
- Abstract
- Introduction
- Problem Definition
- Objectives
- Methodology
- Theoretical Background
- A Theoretical Approach to the Crowdfunding Model
- Types of Crowdfunding
- Crowdfunding Process
- Important Success Factors for a Crowdfunding Project
- Requirements for Equity-Based Crowdfunding in the United States
- Pros and Cons for Crowdfunding
- Business Case: Cosmopol
- Conclusion
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This work paper examines crowdfunding as a financial instrument, exploring various types and their legal implications. The paper delves into the utilization of crowdfunding by start-up companies, particularly focusing on equity-based models and the impact of the JOBS Act in the US. Key themes covered include:- Different types of crowdfunding and their legal frameworks
- Crowdfunding as a viable financing option for start-up companies
- The role of the JOBS Act in facilitating equity-based crowdfunding
- The challenges and opportunities associated with crowdfunding
- A case study illustrating the practical application of crowdfunding
Zusammenfassung der Kapitel (Chapter Summaries)
- Introduction: This chapter provides an overview of crowdfunding and its significance as a financial instrument. It outlines the various types of crowdfunding, highlighting the distinction between donation-based, reward-based, debt-based, and equity-based models. It further underscores the legal complexities associated with different crowdfunding approaches.
- Problem Definition: This chapter defines the research problem, focusing on the growing reliance of start-up companies on crowdfunding as a source of funding. It underscores the challenges faced by these companies in obtaining traditional financing and explores how crowdfunding addresses these limitations.
- Objectives: This chapter outlines the specific objectives of the research paper. It aims to understand the different types of crowdfunding, analyze the legal framework surrounding equity-based crowdfunding, and assess the impact of the JOBS Act on the US market. Additionally, it intends to explore the potential benefits and drawbacks of crowdfunding for start-up companies.
- Methodology: This chapter details the research methodology employed in the paper. It explains the theoretical approach adopted for analyzing crowdfunding, the methods used to gather and analyze data, and the specific sources consulted. It also highlights the limitations of the study and the potential for future research.
- Theoretical Background: This chapter delves into the theoretical underpinnings of crowdfunding. It presents a comprehensive framework for understanding the concept, including its evolution, key characteristics, and its role in the broader context of financial markets. It explores the diverse types of crowdfunding models and their applications in different industries.
- A Theoretical Approach to the Crowdfunding Model: This chapter examines various theoretical approaches to crowdfunding. It discusses key models that explain the dynamics of this financing method, highlighting the motivations of both investors and project owners. It analyzes the factors driving the success or failure of crowdfunding campaigns and explores the economic implications of this emerging financial instrument.
- Types of Crowdfunding: This chapter provides an in-depth analysis of different types of crowdfunding, including donation-based, reward-based, debt-based, and equity-based models. It explores the unique features, legal frameworks, and typical applications of each model. This section offers a comprehensive overview of the crowdfunding landscape, illustrating the diversity of approaches available to individuals and businesses.
- Crowdfunding Process: This chapter examines the practical steps involved in a typical crowdfunding project. It outlines the key stages of project development, from idea generation and feasibility assessment to campaign launch and post-funding management. It provides insights into the crucial factors that contribute to a successful crowdfunding campaign, such as effective communication, community building, and stakeholder engagement.
- Important Success Factors for a Crowdfunding Project: This chapter identifies and analyzes critical factors that influence the success of crowdfunding projects. It explores various aspects of project design, campaign execution, and investor engagement that contribute to achieving funding goals. This section offers practical advice and insights for individuals and businesses planning to launch crowdfunding campaigns.
- Requirements for Equity-Based Crowdfunding in the United States: This chapter focuses on the legal framework surrounding equity-based crowdfunding in the United States, specifically the JOBS Act. It analyzes the act's provisions, highlighting how it facilitates access to equity funding for start-up companies. It explores the requirements for both companies seeking funding and investors participating in equity-based crowdfunding campaigns.
- Pros and Cons for Crowdfunding: This chapter examines the advantages and disadvantages of using crowdfunding as a financing method. It highlights the potential benefits, such as increased accessibility to funding, enhanced brand awareness, and improved customer engagement. It also discusses the potential drawbacks, such as regulatory complexities, investor risk, and potential challenges in managing crowdfunding projects.
- Business Case: Cosmopol: This chapter presents a case study illustrating the practical application of crowdfunding. It examines the experience of a specific start-up company, Cosmopol, that successfully utilized crowdfunding to finance its operations. The chapter analyzes the company's crowdfunding campaign, its fundraising strategy, and the outcomes achieved.
Schlüsselwörter (Keywords)
The core focus of this paper centers on crowdfunding as a financial instrument for start-up companies, particularly examining equity-based models. Key terms include crowdfunding types, legal framework, JOBS Act, equity financing, start-up companies, and business case studies. The paper also explores the advantages and disadvantages of crowdfunding, offering a comprehensive analysis of its potential and limitations.
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- Diplom-Kaufmann (FH) Johann Gross (Author), 2014, Crowdfunding. An Equity Financing Instrument, Munich, GRIN Verlag, https://www.grin.com/document/280938
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