Crowdfunding as a financial instrument for startups

Term Paper , 2015 , 28 Pages , Grade: 1,3

Business economics - Investment and Finance

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.

Table of Content

List of Figures

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

6 Conclusion

References

Internet References

• College: The FOM University of Applied Sciences, Hamburg
• Grade: 1,3
• Authors: Steven Wolf (Author), Eugen Kraemer (Author)
• Publication Year: 2015
• Pages: 28
• Catalog Number: V305910
• ISBN (eBook): 9783668040601
• ISBN (Book): 9783668040618
• Language: English
• Tags: Crowdfunding, Crowdinvesting, Finance and Accounting, Startup, Finanzierung, Investment, Investition, Financial instrument, Finanzierungsinstrument, Crowdfunding forms