Crowdfunding as an instrument for involving the public in the development of small businesses.
Journal Title: Науковий вісник Полтавського університету економіки і торгівлі. Серія "Економічні науки" - Year 2018, Vol 5, Issue 90
Abstract
Аnnotation. The purpose. The article examined the possibilities of public involvement in the development of small business by means of crowdfunding. Methodology of research. The synthesis of scientific developments allowed to determine the main characteristics, typology, advantages and disadvantages of the crowdfunding. A statistical study of the financing of EU business projects in the context of countries and types of crowdfunding was conducted. A structural analysis of global trends in the use of crowdfunding models has been carried out. Findings. The world tendencies of using the models of crowdfunding have been investigated, which has allowed to identify the predominance of loans in the structure of the crowdfunding models. It was established that in foreign countries, crowdfunding is used by small businesses as an instrument of publicity, increasing public access. The description of the main kinds of crowdfunding is given: Reward crowdfunding (the feature is the remuneration of all investors after the idea is implemented as a gift), Equity crowdfunding (the sale of a small share of the business being created, or the proposed share in the company in the framework of long-term investments), Debt crowdfunding (attracting money in exchange for a share in the future business or on a guarantee of return of investments), Donation Crowdfunding (donations from several individuals and legal entities on an irrevocable basis); Royalty Crowdfunding (financing of projects under royalties); Hybrid Crowdfunding (financing projects on a mix of different types). A statistical study of financing of projects of business in the EU countries in terms of countries and types of crowdfunding was conducted. Practical value. The economic concept of the “crowdfunding” is defined as the source of the early stage of venture financing, where a large number of people are mobilized through an online donation or investment model to contribute over a given period of time (a relatively small amount of money) to support the project or business. The conducted research has allowed to highlight the key advantages and disadvantages of application of crowdfunding for the development of small business. Among the advantages of applying crowdfunding are distinguished: the chance to raise funds for acceptable conditions; opportunity to try new ideas without financial investments; a project funded by crowdfunding is becoming more attractive to other investors; geographical attachment to the place; reduction of information asymmetry; improvement of the project management process and increase its efficiency through feedback; reducing the risk of fraud and unfairness; promotes transparency of the use of funds by the parties involved, etc.
Authors and Affiliations
V. Strilets
Keywords
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