Crowdfunding as a source of finance. Crowdsupporting, Crowdinvesting, Crowdlending, Crowddonating

Academic Paper , 2016 , 14 Pages , Grade: 1,7

Business economics - Accounting and Taxes

A good idea for a product or service is often not enough to start a business. Especially at the beginning of starting a business financial resources are needed to invest into the necessary equipment and materials.

But not only new companies, so called startups, but also small and medium enterprises (SMEs) are in need of new capital for expanding their product range or for new product developments which cannot always be obtained from the bank or from the stock market.

Bank financing plays an important role in Germany. However, in 2008 about 35% of German companies complain about problems in credit financing and access to credits, especially small enterprises with an annual turnover to EUR 1 million and large enterprises of more than EUR 50 million.

The decline in lending can also be seen from the fact that banks are increasingly taking more money for loan repayments from companies than to forgive new loans.

This indicates that lending is difficult. Companies therefore have to seek alternative sources of funding. One of several financing alternatives is crowdfunding. This type of financing is subject to this term paper.

Crowdfunding is a project-based form of financing the above mentioned case examples, by which capital from a plurality of donors within a predetermined period of time is raised.

Table of Contents

List of Figures

1 Introduction
1.1 Objective
1.2 Structure

2 Definitions and conceptual delimitations
2.1 Crowdfunding platforms
2.2 The crowdfunding process

3 Crowdfunding as a source of finance
3.1 Crowdsupporting
3.2 Crowdinvesting
3.3 Crowdlending
3.4 Crowddonating

4 Conclusion and Outlook

Bibliography

List of Figures

Figure 1: Collected capital from 2011 to 2014 via Crowdfunding in Germany

Figure 2: Schematic classification of crowdfunding in the parent category of crowdsourcing

Figure 3: Most active categories in 2014

1 Introduction

A good idea for a product or service is often not enough to start a business. Especially at the beginning of starting a business financial resources are needed to invest into the necessary equipment and materials.

But not only new companies, so called startups, but also small and medium enterprises (SMEs) are in need of new capital for expanding their product range or for new product developments which cannot always be obtained from the bank or from the stock market.

Bank financing plays an important role in Germany. However, in 2008 about 35% of German companies complain about problems in credit financing and access to credits, especially small enterprises with an annual turnover to EUR 1 million and large enterprises of more than EUR 50 million.^[1]

The decline in lending can also be seen from the fact that banks are increasingly taking more money for loan repayments from companies than to forgive new loans.^[2]

This indicates that lending is difficult. Companies therefore have to seek alternative sources of funding. One of several financing alternatives is crowdfunding. This type of financing is subject to this term paper.

Crowdfunding is a project-based form of financing the above mentioned case examples, by which capital from a plurality of donors within a predetermined period of time is raised.^[3]

The development of the Internet gives

the crowdfunding increasing importance in the field of corporate and project financing, as project developers and financial backer can contact each other quickly, cost effectively and directly through a web based platform.

Thus the popularity of crowdfunding as a source of finance is also reflected in the annual increase in volumes in the collected capital. The statistics below shows the collected capital through crowdfunding between 2011 and 2014 in Germany.^[4]

Collected capital from 2011 to 2014 (EUR million )

illustration not visible in this excerpt

Figure 1: Collected capital from 2011 to 2014 via Crowdfunding in Germany

1.1 Objective

The objective of this term paper is to identify the challenges and opportunities of international crowdsourcing in the business industry. Furthermore, it shows the impact on the current business models and how crowdsourcing can be used for a company to create value.

[...]

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^[1] Cf. KfW (2009), p.4

^[2] Cf. Häring (2009)

^[3] Cf. Nietsch/Eberle (2014), p. 2575

^[4] Cf. Fuer-Gruender.de (2015), p.3

• College: University of applied sciences Frankfurt a. M.
• Course: IFRS - International Finance & Accounting
• Grade: 1,7
• Author: Malik Dakdaki (Author)
• Publication Year: 2016
• Pages: 14
• Catalog Number: V369323
• ISBN (eBook): 9783668471405
• Language: English
• Tags: Crowd, Crowdfunding, Source of Finance, Crowdfunding process, Crowdsupporting, Crowdinvesting, Crowdlending, Crowddonating