The role of crowd funding in innovative activities

Abstract

The paper considers the concept of innovation and its importance and impact on modern social life. Budget and extra-budgetary forms of its financing are given: state financing, joint-stock, bank credits, venture financing, leasing, business angels, mixed form of financing and crowdfunding. In particular, the form of crowdfunding financing is considered. The purpose of this paper is to study and analyze the forms of crowdfunding financing, as well as to identify its role in the development of innovation. For this purpose, such research methods as analysis, study and evaluation of information were used. The concept of crowdfunding and the mechanism of financing projects through crowdfunding are considered. The sites of Internet sites that perform the function of fundraising by crowdfunding are considered – the site acts as a third party, is not responsible to anyone, only helping to cover the project and managing the funds raised. Any of the site visitors, who are usually not professional financiers, can transfer any amount to the account of the author of the project. The volumes and growth rates of crowdfunding in the world for 2014 are presented. The analysis and comparison of domestic and foreign crowdfunding platforms is carried out. The classification of crowdfunding by the method of reward (namely: “reward crowdfunding”, “equity crowdfunding” and “debt crowdfunding”), and by the method of fundraising (“all or nothing”, “leave everything”, “turning point”, “free” price”, "perpetual financing" and "subscription"). The paper also analyzes the advantages and disadvantages of this method of raising funds, its impact on the development of innovation. The conclusion states that despite all the disadvantages, no other method of financing can provide such advantages resale, market research, sponsorship advertising at no additional cost. Other sources of funding have disadvantages, which are limited public information, high risks of investment in projects. However, in crowdfunding through communication with sponsors, obtaining market reviews from them opens unknown previously ways to reduce these risks.