In the past years the number of startups increased continuously. Often it is the case that a startup doesn’t have the financial power to realize a business and if an investor or a financial institute refuses to support the startup many good ideas can fail already at the beginning.
Therefore it is necessary for startups to find new ways for financing the business ideas. Crowdfunding is one method for financing and investing which nowadays reaches a high popularity and growth among innovative people, groups and companies.
To get a better understanding of the whole context this term paper investigates the different perspectives and actors of crowdfunding to give an answer to the actual aim. The aim is to analyze whether crowdfunding is an appropriate way of gaining funds for startups or not.
In the first part the theoretical information is provided. This includes definitions and differentiations of used basic terms like crowdfunding and crowdinvesting as well as the different forms of crowdfunding. Also in the same part the functionality and the historical development of crowdfunding will be shown.
In chapter 3 the actors of crowdfunding – the startups, the investors and the platforms – will be described. This part will focus on the different reasons, aims and other important aspects for each of the actors.
An overview of advantages and risks for startups and investors will be given in the fourth chapter.
To have a better impression about the different crowdfunding forms, levels and scales, the fifth chapter will show some examples of successful crowdfunding campaigns.
Based on all researched and derived information, the last chapter will give a summary and conclusion to the aim of this term paper.
Inhaltsverzeichnis (Table of Contents)
- 1 Introduction
- 1.1 Problem
- 1.2 Aim
- 1.3 Procedural method
- 2 Crowdfunding
- 2.1 Definitions: crowd, funding, crowdfunding, crowdinvesting
- 2.2 Forms of crowdfunding
- 2.3 Crowdfunding and Crowdinvesting
- 2.4 Functionality
- 2.5 Historical Development
- 3 Actors of crowdfunding
- 3.1 Capital-seeking companies (startups)
- 3.1.1 Reasons and aims
- 3.1.2 Selection of the form and conditions
- 3.1.3 Selection criteria of crowdfunding from the view of capital seeking companies (startups)
- 3.2 Investors
- 3.2.1 Who are the investors?
- 3.2.2 Reasons and aims – intrinsic
- 3.2.3 Participation in the profit and accretion – monetary
- 3.3 Financial intermediary (platforms)
- 3.3.1 Aims
- 3.3.2 Remuneration model
- 4 Advantages and risks
- 4.1 Overview
- 4.2 Startups advantages
- 4.3 Startups disadvantages and risks
- 4.4 Investors - advantages
- 4.5 Investors - disadvantages and risks
- 5 Current examples of successful Crowdfunding projects (practice examples)
- 5.1 Reward based
- 5.2 Equity based
- 5.3 Lending based
- 5.4 Donation based
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This term paper aims to analyze whether crowdfunding is a suitable method for startups to secure funding. It explores the various perspectives and actors involved in the crowdfunding process to provide a comprehensive understanding of its viability.
- Different forms and functionalities of crowdfunding
- The roles and motivations of startups, investors, and crowdfunding platforms
- Advantages and risks associated with crowdfunding for startups and investors
- Examples of successful crowdfunding campaigns across different models
- Overall assessment of crowdfunding's effectiveness as a funding mechanism for startups
Zusammenfassung der Kapitel (Chapter Summaries)
1 Introduction: This introductory chapter establishes the context of the term paper by highlighting the increasing number of startups and the challenges they face in securing funding. It emphasizes the growing popularity of crowdfunding as an alternative financing method and states the paper's objective: to analyze the suitability of crowdfunding for startups. The chapter outlines the procedural method, which involves a theoretical exploration of crowdfunding, an examination of the actors involved, an analysis of advantages and risks, and a review of successful crowdfunding campaigns.
2 Crowdfunding: This chapter provides a theoretical foundation by defining key terms such as "crowd," "funding," "crowdfunding," and "crowdinvesting." It explores the various forms of crowdfunding and delves into the functionality and historical development of this financing mechanism. This section lays the groundwork for understanding the different models and their evolution, providing a crucial context for the subsequent analysis of actors and their interactions.
3 Actors of Crowdfunding: This chapter examines the three main actors in the crowdfunding ecosystem: startups, investors, and platforms. For startups, it analyzes their reasons for using crowdfunding, their selection criteria for choosing a platform and model, and their overall objectives. For investors, it investigates their motivations (both intrinsic and monetary), highlighting the diverse range of individuals and groups involved. Finally, it focuses on the role of crowdfunding platforms, outlining their aims and remuneration models, showcasing their crucial position in facilitating the entire process.
4 Advantages and risks: This chapter presents a balanced overview of the advantages and disadvantages of crowdfunding for both startups and investors. For startups, it details the benefits, such as access to funding and marketing opportunities, alongside the risks, like the potential failure to reach funding goals and the dilution of equity. For investors, it outlines the potential for high returns and diversification, but also notes the risks associated with investing in early-stage companies and the lack of control over the startup's operations. This section provides a critical assessment of the practical implications of using crowdfunding.
5 Current examples of successful Crowdfunding projects (practice examples): This chapter showcases successful crowdfunding campaigns across different models (reward-based, equity-based, lending-based, and donation-based). Each example illustrates the application of specific crowdfunding models and demonstrates the diverse types of projects that can utilize this method, providing concrete examples of the theoretical concepts presented earlier.
Schlüsselwörter (Keywords)
Crowdfunding, Crowdinvesting, Startups, Funding, Investors, Platforms, Financing, Risk, Return, Reward-based Crowdfunding, Equity-based Crowdfunding, Lending-based Crowdfunding, Donation-based Crowdfunding.
Frequently Asked Questions about "This is a comprehensive language preview which includes the title, table of contents, objectives and key themes, chapter summaries, and key words"
What is the purpose of this document?
This document provides a comprehensive overview of a term paper analyzing the suitability of crowdfunding as a funding method for startups. It includes a table of contents, objectives and key themes, chapter summaries, and keywords.
What topics are covered in the term paper?
The term paper explores various aspects of crowdfunding, including different forms and functionalities, the roles and motivations of startups, investors, and crowdfunding platforms, the advantages and risks associated with crowdfunding for both startups and investors, and examples of successful crowdfunding campaigns across different models. The overarching goal is to assess crowdfunding's effectiveness as a funding mechanism for startups.
What are the key themes of the research?
Key themes include the different forms of crowdfunding (reward-based, equity-based, lending-based, donation-based), the motivations and roles of startups and investors, the advantages and disadvantages of crowdfunding for each party, and a critical assessment of the risks involved. The research aims to provide a balanced view of crowdfunding's potential.
Who are the key actors involved in crowdfunding?
The three main actors are: capital-seeking companies (startups), investors, and financial intermediaries (platforms). The paper analyzes the motivations, objectives, and decision-making processes of each actor within the crowdfunding ecosystem.
What are the advantages and disadvantages of crowdfunding for startups?
Advantages for startups include access to funding, marketing opportunities, and potentially faster funding cycles. Disadvantages include the risk of not reaching funding goals, equity dilution, and the potential for increased scrutiny and transparency.
What are the advantages and disadvantages of crowdfunding for investors?
Advantages for investors include the potential for high returns, diversification of their portfolio, and the opportunity to support innovative ventures. Disadvantages include the risk associated with investing in early-stage companies, the lack of control over the startup's operations, and the potential loss of investment.
What types of crowdfunding models are discussed?
The paper examines reward-based, equity-based, lending-based, and donation-based crowdfunding models, providing examples of successful campaigns in each category.
What is the methodology of the term paper?
The methodology involves a theoretical exploration of crowdfunding, an examination of the actors involved, an analysis of advantages and risks, and a review of successful crowdfunding campaigns. The paper aims to provide a comprehensive understanding of crowdfunding's viability as a funding source for startups.
What are the key findings (inferred from the summaries)?
While not explicitly stated as findings, the chapter summaries suggest that crowdfunding offers both opportunities and risks for startups and investors. The success of a crowdfunding campaign depends heavily on the chosen model, the startup's preparedness, and the attractiveness of the project to potential investors.
Where can I find examples of successful crowdfunding projects?
The term paper includes a chapter dedicated to showcasing successful crowdfunding projects across different models (reward-based, equity-based, lending-based, and donation-based), providing concrete examples to illustrate the concepts discussed.
- Quote paper
- Steven Wolf (Author), Eugen Kraemer (Author), 2015, Crowdfunding as a financial instrument for startups, Munich, GRIN Verlag, https://www.grin.com/document/305910
