Crowd Funding pdf Download – Benefits,Concern,crowd Funding In India – hello friends Welcome to studydhaba.com . Here We are Going to discuss about What is Crowd Funding,What are the benefits of Crowd Funding and What is the current Scenario in India Bout Crowd Funding .Crowd Funding pdf Download – Benefits,Concern,crowd Funding In India
- What is Crowd Funding ?
- Types Of Crowd Funding
- Benefits of Crowd Funding
- Concern Related To Crowd Funding
Crowd Funding pdf Download – Benefits,Concern,crowd Funding In India
We Have heard Lots about Crowd funding in recent from print Media and Electronic Media. Crowd funding is an Innovative Way for Raising funds For Those Who do not Have Enough Resources To Start A project.
As We Know Everything Has Positive as well as Negative Aspects . Crowd funding all has Same positive As Well as Negative points.Crowd Funding pdf Download – Benefits,Concern,crowd Funding In India
What is Crowdfunding?
- Crowdfunding is asking a crowd of people to donate a defined amount of money for a specific cause or project in exchange for various rewards.
- It is the practice of pooling in of resources by numerous people, thus the term ‘crowd’, to fund prospective projects.
- It is an alternative finance system where funds are raised through mediums like internet-mediated registries, mail-order subscriptions, benefit events, and the like.
- Crowdfunding is usually done via online platforms.
- The fundraisers set up their public campaign highlighting the main features of their proposed project and accepting donations for the same.
- These funding applications can be of any nature. They can range from charitable to educational projects to personal ventures or creative ones.
- It helps to improve the presence of small businesses and startups in social media, increases their investment base, and funding prospects.
- There are different types of crowdfunding like debt based, equity-based, cause-based, rewards based, software value token, donation based, litigation, etc.
- Public-Private Partnership (PPP) based on the equity-based model is practised in crowdfunding in India.
Types Of crowd Funding
There are three general categories crowdfunding can fall under:
- Equity-based crowdfunding is asking a crowd to donate to your business or project in exchange for equity.
- Donation Based Crowd Funding is asking a crowd to donate to your project in exchange for tangible, non-monetary rewards such as an e-card, t-shirt, pre-released CD, or the finished product.
- Debt Based crowd Funding is asking a crowd to donate to your business or business project in exchange for financial return and/or interest at a future date.
Benefits Of Crowd Funding
- It can be a fast way to raise finance with no upfront fees
- Pitching a project or business through the online platform can be a valuable form of marketing and result in media attention
- Sharing your idea, you can often get feedback and expert guidance on how to improve it.
- It is a good way to test the public’s reaction to your product/idea – if people are keen to invest it is a good sign that the your idea could work well in the market.
- Investors can track your progress – this may help you to promote your brand through their networks ideas that may not appeal to conventional investors can often get financed more easily
- Your investors can often become your most loyal customers through the financing process
- It’s an alternative finance option if you have struggled to get bank loans or traditional funding.
- With crowdfunding, there is no formal banking system and hence no tedious procedure required.
- It is efficient and consumes less time.
- It enhances the productivity of innovation and entrepreneurship.
- It helps in elevation and progress of small and medium scale industries.
- It helps in improving the ease of doing business policy.
Crowdfunding in India:
- Crowdfunding is nothing new to India.
- Since centuries we have been donating ‘chanda’ for some or the other socio-cultural cause, such as building of religious infrastructure.
- The online scene is a bit of a different matter though.
- So the crowdfunding scene in India is rather new with not much awareness amongst people.
- Crowdfunding, presently in a pubescent stage, has to face a lot of problems in India.
- Firstly, there is no proper legal regulation setting up rules regarding and specifying the same.
- But late last year, the Securities and Exchange Board of India (SEBI) released a paper acknowledging the need for the regulation.
- It defined crowdfunding as “solicitation of funds (small amount) from multiple investors through a web-based platform or social networking site for a specific project, business venture or social cause.”
- Secondly, people in India are still adjusting to a digital lifestyle where most transactions take place online.
- Moreover, the industry is still unable to connect to people, though, efforts have been made in this direction.
- Miracle Foundation
- Seedrs are some of the leading crowdfunding platforms in India.
Wishberry funds for creative artists.
Milaap is a platform for Charities and Miracle Foundation works for orphans.
RangDe is an internet-based peer-to-peer micro-lending platform that facilitates low-cost loans to rural entrepreneurs across India.
CrowdCube and Seedrs are Internet platforms which enable small companies to issue shares over the Internet and receive small investments from registered users in return.
SEBI Guidelines For Crowd Funding In India – Latest SEBI NORMS For Crowd Funding
To help start-ups attract investments, the Securities and Exchange Board of India (SEBI) has proposed new norms of crowdfunding through social networks and web-based platforms.
Under the proposed norms:
- Only SEBI-registered entities and accredited investors can participate in crowdfunding.
- These include institutional investors, companies, HNIs and financially-secure retail investors advised by investment advisors or portfolio managers.
- For retail investors, the cap is fixed at Rs.60,000 or 10% of their net worth.
- Companies can raise up to Rs. 10 crore a year.
- The entities should not be associated with a business group having a turnover of more than Rs. 25 crore.
- Entities with an established business listed on an exchange or being in existence for 4 years or more are prohibited from participating.
- Entities engaged in real estate and financial sector business are also barred.