Tutor Quora

An Analysis Of Crowdfunding

Academic Anxiety?

Get an original paper within hours and nail the task

156 experts online

Free Samples

An Analysis Of Crowdfunding

.cms-body-content table{width:100%!important;} #subhidecontent{ position: relative;
overflow-x: auto;
width: 100%;}

An Analysis Of Crowdfunding

0 Download10 Pages / 2,409 Words

Discuss about the Analysis of Crowdfunding.

Often it is seen that a person has a great idea but lacks the funds to work on such idea. Such person has no means of attaining the capital required for implantation of the idea. Mere monetary insufficiency should not come in the way of an idea. And to solve this very problem, the concept of Crowdfunding was born. In the following segments, various aspects relating to Crowdfunding have been explained.
Crowdfunding is the medium of raising monetary contributions from the general public for funding (Lipton, Herzberg & Welsh, 2016) a venture or a project. The general public can include friends, family, consumers or potential investors. Crowdfunding is a collective approach of efforts of a large number of people and the primary source of such funding is online through social media (Young, 2013). There are various Crowdfunding platforms for raising monetary contributions. Such people leverage their network to increase the reach and exposure of Crowdfunding. 
Crowdfunding is a rising trend for raising capital (Laemmermann, 2012). One of the most difficult parts of any business is acquisition of capital, to either start it or to grow it. Banks loans are readily available but are not practical for small or new businesses. The reason behind loans not being practical for such businesses is the lack of significant collateral or established cash flow. Further, a loan application takes a lot of time and efforts and even then an approval is not guaranteed.
Crowdfunding provides a wider investor pool and various flexible fundraising options. Through the medium of Crowdfunding, capital is raised for entrepreneurial undertakings, creative and artistic plans and even for not for profit and society oriented social entrepreneurship projects. By raising capital through the medium of Crowdfunding, many startups have skyrocketed, which in absence of funds, would have just been dreamy ventures (Cunningham, 2012). Crowdfunding helps the startups to attain venture capital from several sources over the internet and helps to bridge the gap among undersized and outsized organizations that are at the early stages of developing their businesses.
There are various ways to raise capital through Crowdfunding (Freedman & Nutting, 2015). It can be a Rewards based Crowdfunding; or a Donation based Crowdfunding; or an Equity based Crowdfunding. As the name suggests, a Rewards based Crowdfunding involves a persons’ capital to be contributed towards the business in exchange for a reward. This reward can be in the form of products or services offered by the company. This method of Crowdfunding lets the business owners reward their contributor without actually selling any ownership stake or incurring much extra expense (Dresner, 2014).
A Donation based Crowdfunding is the communal endeavor of different people for some benevolent reasons. For example, by organizing a civic Crowdfunding, a Donation based Crowdfunding is established as the results of a civic Crowdfunding would be used o improve the public space (Bottiglia & Pichler, 2016). An Equity based Crowdfunding permits its contributors to be part owners of the organization by offering them equity shares in return for such contributions. By becoming the equity owners in a company, the contributors attain economic return on their investment and in due course obtain a part of the profits in the manner of dividend or distribution (Australian Government, 2014).
An investor has to be vigilant before investing in any Crowdfunding. An investor has to understand the rights they have and need to check the terms of such funding to ensure that the money invested by them would be returned if the start up cancels the project. An investor has to research about the Crowdfunding platform. Lastly, it has to be kept in mind that such projects are experimental in nature and are just prototypes.
To establish a successful Crowdfunding campaign, certain factors are to be kept in mind. An enthusiastic group of friends and family is essential who are willing to become the contributors and urge others to become contributors to the fund. A clear and precise business plan is a pre-requisite for such a campaign. And most importantly, the ability to answer any question of the probable contributors makes the whole Crowdfunding campaign a success.
The highest reported Crowdfunding till date was for the project Star Citizen (Crawley, 2015). Star Citizen is an online space trading and combat video game which is being developed by Chris Roberts and Cloud Imperium Games. In October 2012, the developers of this began a Crowdfunding campaign on the game’s website by means of IgnitionDeck which is a Crowdfunding plugin for WordPress. After about just a week into the Crowdfunding crusade, they began raising funds through Kickstarter campaign. Their initial targets of funding were quickly achieved. After that, the developers added new-related goals to the funding campaign to expand the targets of Crowdfunding. The date of the campaign was also extended by ten days to match the end date of Kickstarter and to further raise capital. Just two before the campaign was set to close; the game attained a record of utmost crowdfunded game project with over US $4.2 million. By the end of initial Crowdfund campaign, a total of US $6.2 million had been raised. Funding was continued even after the end of initial campaign. By mid 2013, Star Citizen became the utmost funded Crowdfunding venture anywhere, by raising a total of US $15 million. Till date, Star Citizen has raised over US $100 million through Crowdfunding and is the best example of a successful commercial Crowdfunding.
Not only commercial but social Crowdfunding campaigns are also quite successful. A Crowdfunding campaign for “An Hour of Code for Every Student” was started through the platform of Indiegogo with the object of raising UD $5 million (Indiegogo, 2015). On December 15, 2014, the end date of this campaign, a total of US $5024281 was raised and the campaign was declared successful. The objective of this campaign stated that each student in each school must get the opportunity to study computer science. So, even social campaigns find success through the medium of Crowdfunding.
Even with the growing popularity of crowd sourced funding across the globe; Australia has been slow in recognizing and adapting to this global phenomenon. The Australian regulatory bodies like ASIC (Australian Securities and Investments Commission) have moved to affect the existing regulatory frameworks to Crowdfunding. In 2012, ASIC (Schulz & Mollica, 2015) issued various guidelines which contained various factors. These factors included the sort of reward offered to contributors and the manner of platform to be used. Such schemes have been classified as either an administered investment plan or fundraising, as per Chapter 6D of the Corporations Act 2001 (Cth).
But the reforms of ASIC are not enough. The equity based Crowdfunding has been emerging as a winner as a means of raising capital. In December 2015, Minister for Small Business and the Assistant Treasurer, Kelly O’Dwyer, brought in the legislation containing the government’s anticipated crowd-sourced equity funding framework, in the Federal Parliament (Farrar, 2016). The legislation has been designed to provide for online fundraising from those people who make economic contributions to an organization in return for an equity stake in the organization.
The Corporations Amendment (Crowd-sourced Funding) Bill 2015 (Bill) looks forward to amend the Corporations Act 2001 (Cth). Through this Bill, a framework has to be established to assist crowed-sourced funding offers by small unlisted companies. Further, this Bill provides temporary relief to new public companies which are qualified to crowd fund. This Bill also provides temporary relief to such new public companies from the applicable corporate government requirements (Bull and New, 2016). This Bill also gives the Minister a power to provide exemption, to a few financial market and clearing and settlement facility operators, from some specific segments of the Australian market License and clearing and settlement facility licensing regimes. This Bill also seeks to make substantial modifications to the Australian Securities and Investments Commission Act, 2001.
Keeping in view the earlier suggestions of Corporations and Markets Advisory Committee (CAMAC), the Bill creates some basic rules for Crowdfunding. The Bill states that Crowdfunding will be available for only such unlisted companies who have assets worth less than $5 million and have an annual turnover of less than $5 million (Kollmorgen, 2016). An investment cap has been prescribed as per which, an investor can contribute up to an amount of $10,000 for a period of 12 months (The Treasury, 2015). This Bill provides a protection in the form of a five day cooling off period, during which they can reclaim the invested amount, in case they have second thoughts about such investment. The CAMAC recommendations which have been included in this Bill relate to the cooling off period and the investment cap (Australian Government, 2014).
Developed countries around the globe such as United States, Italy and New Zealand have recognized the global phenomenon of Crowdfunding as a source of raising capital. In United States alone, Venture Expert identified all seed level VC funding rounds in high technology (Excluding biotechnology) from March 2009 through July 2012 (Mollick and Robb, 2016). Crowdfunding complements the traditional sources of finance, debt and equity, in a genuine manner. These countries have been very active in developing and implementing laws to regulate crowd-sourced funding.
A comprehensive Crowd-sourced equity funding (CSEF) scheme was introduced in New Zealand in mid-2014 and has been quite significant as a reference in the Australian debate on Crowdfunding (LegalVision, 2016). As per the New Zealand scheme, all incorporated entities can raise capital through CSEF. The amount which can be raised by an issuer through CSEF has been capped for a period of 12 months for an amount of NZ $2 million. But this capped limit does not include the contributions made by wholesale investors. Further, a risk acknowledgement statement has to be signed by the investors as per this scheme. On December 01, 2014 the Financial Markets Conduct Act 2013 (NZ) (“FMC Act”) and the Financial Markets Conduct Regulations 2014 (NZ) (“FMC Regulations”) came into force, to enable the Crowdfunding and peer-to-peer lending services. As per Part 6 of the FMC Act, states three key regulations for laying emphasis on the benefits of Crowdfunding. These include, licensing Crowdfunding service providers; setting out disclosure requirements to safeguard the startups and the investors; and providing standards and suitable systems to make certain that there is a limit for a 12 month period for an amount not more than NZ $2 million.
The legislative framework of New Zealand has been used to frame the Australian Crowdfunding Bill. Both CAMAC and New Zealand models restrict the amount that a company can raise through Crowdfunding to $2 million for a period of 12 months. Though both the models exclude any funds raised under specific preexisting disclosure exemptions from this investment cap. New Zealand’s Crowdfunding rules do not necessitate the investors to issue a prospectus of to abide by considerable scrutiny from regulators. Also, there is no cap over the sum that a single investor can invest. So the New Zealand model of Crowdfunding regulations is much more attractive as against the Bill and CAMAC’s plan as there is no limit for an individual investor. But if the Australian regulations and legislation mirror the New Zealand’s, it might result in the convergence of both the countries’ Crowdfunding markets.It is quite clear from the above discussions that Australia’s current approach towards Crowdfunding has room for improvement. Attempts are being made regularly by the Australian Government to understand and respond to the regulatory shortcomings in a better way. The Bill highlights the potential of a successful regulation for Crowdfunding but still, a need for more clarity in the matter of regulations for issuers, intermediaries and investors is needed.
To conclude, it would not be wrong to say that Crowdfunding is a hot selling item in the market (Lennon, 2014). Every other startup and even large organizations, for that matter, are raising capital from this source. These organizations prefer Crowdfunding as the source because of the absence of unnecessary hassles. And also, to escape from the high interests charged by banks and financial institutes against the loans, this method is preferred. The sudden boom has given birth to regulatory framework, which have been, till now, unable to catch up with the speed of Crowdfunding industry. But with the latest amendments and the Bill, this shortfall would be dealt with. 
Australian Government. Corporation and Markets Advisory Committee (2014) Crows sourced equity funding. May 2014
Bottiglia, R., & Pichler, F. (2016) Crowdfunding for SMEs: A Eurpean Perspective. Germany: Springer, p 17
Bull, J., and New, H. (2016) New equity crowd-source funding (CSF) legislation. Corporate Law Bulletin, pp 7-9
Crawley, D. (2015) Star Citizen Crowdfunding passes $100M mark with over 1M backers. [Online] VentureBeat.  Available from: https://venturebeat.com/2015/12/14/star-citizen-crowdfunding-passes-100m-mark-with-over-1m-backers/ [Accessed 03/09/2016]
Cunningham, W.M. (2012) The JOBS Act: Crowdfunding for Small Businesses and Startups. New York: Apress p 21.
Dresner, S. (2014) Crowdfunding: A Guide to Raising Capital on the Internet. Hoboken: John Wiley & Sons.
Farrar, A. (2016) Crowdfunding in Australia. PKF, 17th Mar. Available from: https://www.pkf.com.au/Media/PKF-Lawler-Blog/2016/March/Crowdfunding-legislation [Accessed 03/09/2016]
Freedman, D.M., & Nutting, M.R. (2015) A Brief History of Crowdfunding. [Online] Freedman and Nutting. Available from: https://www.freedman-chicago.com/ec4i/History-of-Crowdfunding.pdf [Accessed 03/09/2016]
Indiegogo (2015) An Hour of Code for Every Student. [Online] Indiegogo.  Available from: https://www.indiegogo.com/projects/an-hour-of-code-for-every-student#/ [Accessed 03/09/2016]
Kollmorgen, A. (2016) Are Crowdfunding sites the real winners?. Choice, 15th Feb. Available from: https://www.choice.com.au/money/financial-planning-and-investing/stock-market-investing/articles/crowdfunding-risks-and-rewards [Accessed 03/09/2016]
Laemmermann, K. (2012) Crowdfunding. Epubli, P 9LegalVision (2016) What you need to know about Crowdfunding in 2016. [Online] LegalVision. Available from: https://legalvision.com.au/what-you-need-to-know-about-crowdfunding-in-2016/ [Accessed 03/09/2016]

Lennon, P. (2014) The Crowdfunding Book: A How-To Book for Entrepreneurs, Writers, and Inventors. Virginia: Author Incubator
Lipton, P., Herzberg, A., & Welsh, M. (2016) Understanding Company Law. 18th ed. Australia: Thomson Reuters.
Mollick, E., and Robb, A. (2016) Democratizing Innovation and Capital Access: The Role Of Crowdfunding. California Management Review, 58(2), p
Schulz, L., & Mollica, D. (2015) The regulation of Crowdfunding in Austrralia: where are we and what’s to come?. [Online] Minter Ellison. Available from: https://m.minterellison.com/files/Uploads/Documents/Publications/Articles/Aus-banking-and-finance-law-bulletin_leigh-schulz-anddomenic-mollica_aug2015.pdf [Accessed 03/09/2016]
The Treasury (2015) Facilitating crowd-sourced equity funding and reducing compliance costs for small businesses. [Online] Australian Government. Available from: https://www.treasury.gov.au/~/media/Treasury/Consultations%20and%20Reviews/Consultations/2015/Crowd-sourced%20equity%20funding/Key%20Documents/PDF/Crowd-sourced-equity-funding.ashx [Accessed 03/09/2016]
Young, T.E. (2013) The Everything Guide to Crowdfunding: Learn how to Use Social Media for Small-business Funding. Avon, Massachusetts: Adams Media, p 14.

Free Membership to World’s Largest Sample Bank

To View this & another 50000+ free samples. Please put
your valid email id.


Yes, alert me for offers and important updates


Download Sample Now

Earn back the money you have spent on the downloaded sample by uploading a unique assignment/study material/research material you have. After we assess the authenticity of the uploaded content, you will get 100% money back in your wallet within 7 days.

UploadUnique Document

DocumentUnder Evaluation

Get Moneyinto Your Wallet

Total 10 pages


*The content must not be available online or in our existing Database to qualify as

Cite This Work
To export a reference to this article please select a referencing stye below:


My Assignment Help. (2017). An Analysis Of Crowdfunding. Retrieved from https://myassignmenthelp.com/free-samples/an-analysis-of-crowdfunding.

“An Analysis Of Crowdfunding.” My Assignment Help, 2017, https://myassignmenthelp.com/free-samples/an-analysis-of-crowdfunding.

My Assignment Help (2017) An Analysis Of Crowdfunding [Online]. Available from: https://myassignmenthelp.com/free-samples/an-analysis-of-crowdfunding[Accessed 19 December 2021].

My Assignment Help. ‘An Analysis Of Crowdfunding’ (My Assignment Help, 2017) accessed 19 December 2021.

My Assignment Help. An Analysis Of Crowdfunding [Internet]. My Assignment Help. 2017 [cited 19 December 2021]. Available from: https://myassignmenthelp.com/free-samples/an-analysis-of-crowdfunding.

.close{position: absolute;right: 5px;z-index: 999;opacity: 1;color: #ff8b00;}


Thank you for your interest
The respective sample has been mail to your register email id


$20 Credited
successfully in your wallet.
* $5 to be used on order value more than $50. Valid for
only 1

Account created successfully!
We have sent login details on your registered email.



MyAssignmenthelp.com is the perfect solution to render quality solution for all sort of academic issues. We have hired professionals from different fields of study to provide assistance with different subjects. We successfully have provided different types of assignment solutions on 100+ subjects. We have hired industry experts to deliver nursing assignment, hr assignment and finance assignment help. To offer quality content with IT assignments, we have hired IT professionals to render programming language assignment help and IT assignment help for other types of IT assignments as well.

Latest Business Law Samples

div#loaddata .card img {max-width: 100%;

BU1112 Business Law
Download :
0 | Pages :

Course Code: BU1112
University: James Cook University

MyAssignmentHelp.com is not sponsored or endorsed by this college or university

Country: Australia

Part A
Whether Stella is considered as an employee of PRX?
The main difference between employee and independent contractor is stated below:
Employee entered into contract of service, but contractor entered into contract for services.
Employer exercise control over the employee but no control was exercised by employer on contractor. It is considered as traditional test which was developed in Zuijs v Wirth Bros(Zuijs…
Australia South Lake Management health finance management  University of New South Wales 

BSBWHS605 Develop Implement And Maintain WHS Management Systems
Download :
0 | Pages :

Course Code: BSBWHS605
University: Swinburne University Of Technology

MyAssignmentHelp.com is not sponsored or endorsed by this college or university

Country: Australia

Work Health and Safety Management System (WHSMS) is a collection of plans, tools, activities and processes. List 3 of these plans, tools, activities or processes and explain what they are,
The means, nitty gritty beneath, can be utilized whether the arranging procedure is straightforward or complex. They are:
Evaluating the current word related to wellbeing and security status including the ‘administration framework’ Lussier, R. N…
Australia Brisbane Management Work Health and Safety Management System (WHSMS University of Brisbane MBA 

BUSN331 Business Law
Download :
0 | Pages :

Course Code: BUSN331
University: Centennial College

MyAssignmentHelp.com is not sponsored or endorsed by this college or university

Country: Canada

In Alberta, the Residential Tenancies Act applies to all the people in this jurisdiction, who rent their space out (Alberta Queen’s Printer, 2016). Through this act, the rights and responsibilities of the landlords and tenants are brought forward (Landlord and Tenant, 2015).
Question 1
Before a tenant can move in the rented accommodation, the tenant and the landlord have to reach an agreement, with regards to the…
Australia Edmonton Humanities Management University of New South Wales Masters in Business Administration 

LA1040 Contract Law
Download :
0 | Pages :

Course Code: LA1040
University: University Of London

MyAssignmentHelp.com is not sponsored or endorsed by this college or university

Country: United Kingdom

A contract is an agreement between the parties which is enforceable legally in the courts. There are several provisions of law which governs how the terms related to the contract would operate. A contract consists of a set of provisions which are known as contractual terms. The weightage of such terms are not equal as one term may have a more significant consequence as compared to the other in relation to their brea…
United Kingdom London Economics Management University of London 

TLAW202 Corporations Law
Download :
0 | Pages :

Course Code: TLAW202
University: Top Education Institute

MyAssignmentHelp.com is not sponsored or endorsed by this college or university

Country: Australia

If any person wants to carry out his business in the form of a company, then, it is necessary that the registration or incorporation requirements of such country must be met. In Australia, the Corporation Act 2001 and the guidelines laid down by ASIC provides with the steps that must be accomplish in order to establish a corporate entity.  (Malbon & Bishop, 2006).
A company is of great significance as it is treated as a …


Need an essay written specifically to meet your requirements?

Choose skilled experts on your subject and get an original paper within your deadline

156 experts online

Your time is important. Let us write you an essay from scratch

Tips and Tricks from our Blog

11174 Introduction To Management

Free Samples 11174 Introduction To Management .cms-body-content table{width:100%!important;} #subhidecontent{ position: relative; overflow-x: auto; width: 100%;} 11174 Introduction

Read More »