Journal Press India^®

Author Details ( * ) denotes Corresponding author

This study seeks  to  examine the  relatively new  trend in  alternative financing; namely, crowd funding and  its  role in  funding start ups  and  new  enterprises. Crowd funding is the
Financing of a project by a group of individuals (collectively, “the crowd”) instead of professional“accredited” entities or individuals such as banks, venture capitalists or business angels.
Design/Methodology/Approach: The study examines how crowd funding works. The concept of crowd funding is also examined in the context of the related concept of crowd sourcing. The study examines the global market for crowd funding and the rationale of businesses to crowd fund or crowd source their new ventures, given the challenges of capital access for fledgling enterprises. The market for crowd funding is examined in the context of different crowd funding models. In this context, the study also includes illustrations of enterprises that have adopted specific models given their strategic objectives.
Findings: The study finds that crowd funding as a means of alternative financing is growing globally. Donation and reward-based entities still remain the largest group.  However, equity based platforms are also raising funds in some European countries and Australia.  Presently, equity crowd funding is not legal in Canada and is sought to being legalized in the U.S. under the JOBS Act.
Research Limitations/Implications: The study has a number of implications for future research, for instance, whether crowd funding does indeed provide benefits of clustering? Also, future studies can examine different revenue sharing models in the context of equity crowd funding models.
Practical Implications: Insights on data pertaining to different crowd funding models, garnered from crowdsourcing.org, can be useful to potential entrepreneurs and  policy makers.
Originality/Value: Presently very few published academic studies of crowd funding exist.  Also, to my knowledge, there are none that provide a discussion on crowd funding in Canada.

Keywords

Crowd funding, Alternative Financing, Entrepreneurship.

1. Bradford, C.S. (2012), “Crowd funding and the Federal Securities Laws”, Columbia Business Law, Available through Social Sciences Research Network website at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1916184, accessed on November17, 2012.
2. Burtch, G., Ghose, A., and Wattal, S. (2012), “An Empirical Examination of the Antecedents and Consequences of Investment Patterns in Crowd-funded Markets”, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1928168, accessed on November17, 2012.
3. Griffin, Z.J. (2012), “Crowd funding: Fleecing the American Masses”, (March) Available through Social Sciences Research Network website at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2030001, accessed on November 28, 2012.
4. Schweinbacher, A. and Larraide, B. (2011), “Crowd funding of Small Entrepreneurial Ventures”, forthcoming “Handbook of Entrepreneurial Finance”, New Delhi, Oxford University Press, Available through Social Sciences Research Network website at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1699183, accessed on November 28, 2012.

Weblinks

• http://www.globalgiving.org/, accessed on February 18, 2012.
• http://epicstep.com/, accessed on February 18, 2012.
• http://www.kickstarter.com/, accessed on February 18, 2012 accessed on February 18, 2012.
• http://www.kickstarter.com/, accessed on February 18, 2012.
• http://www.kiva.org/, accessed on February 18, 2012. 
• https://www.sellaband.com/, accessed on February 18, 2012.  http://www.crowdsourcing.org/, accessed on February 18, 2012.
• http://www.fundweaver.com/en,accessed on February 18, 2012