Crowdfunding Service Research Articles

Legal Protection For Investors In Crowdfunding Services Through Information Technology Offers (Equity Crowdfunding)

The readiness of the community in the era of information technology has opened up opportunities in online businesses such as equity crowdfunding, equity crowdfunding as an alternative capital is increasingly in demand, especially by novice businesses. The Financial Services Authority issues regulations regarding the Equity Crowdfunding transaction model by issuing the Financial Services Authority Regulation Number 37 / POJK.04 / 2018. This provides questions for the regulation of Equity Crowdfunding in Indonesian Capital Market Law. The writer in this study would like to examine and analyze the Equity Crowdfunding activities and legal protection for investors, because legal protection is a form of legal certainty. The research method used is a normative juridical types, the problem approach uses the legislation approach and the conceptual approach. The results show that equity crowd funding is a form of new innovation in funding sources. The service mechanism has many similarities with public offering activities in the capital market, only the implementation is simpler. Equity Crowdfunding legal protection for investors who have been registered in the provisions of Chapter 54 paragraph (2) POJK Number 37 / POJK.04 / 2018, providing the latest information is only placed on the organizer's website or website.

The European Crowdfunding Service Providers Regulation and the Future of Marketplace Lending and Investing in Europe: the ‘Crowdfunding Nature’ Dilemma (UPDATED JULY 2020)

The European Commission’s Proposal for a Regulation on European Crowdfunding Service Providers (ECSPs) for businesses, since its presentation, has faced difficult trilateral negotiations among the European Commission, the European Parliament and the Council of the European Union. The length of the legislative process can be explained not only by the insurgence of nationalisms, the uncertainty related to Brexit negotiations and the COVID-19 pandemic outbreak, but also because of the different views of the three European Institutions about crowdfunding and on how to regulate it. Nonetheless, they eventually reached an agreement in December 2019 and the Regulation is finally close to its formal adoption. The present paper, after briefly describing crowdfunding main features, will critically and analytically analyze the main aspects of the ECSPs Regulation, with respect to the approved text and to the pre-existing versions, evaluating the available alternatives, their pros and cons and proposing adjustments to reach a functional, tiered and proportional regulation and shed light on the nature and future of financial-return crowdfunding in Europe. The present paper is an updated version of my previous one here: https://ssrn.com/abstract=3594353.

TRENDS AND PROSPECTS FOR THE IMPLEMENTATION OF CROWDFUNDING AS A WAY OF FINANCING INVESTMENT PROJECTS IN RUSSIA

With the rapid development of the digital economy and business transformation, modern financial technology tools are becoming more and more in demand. This article explores and reflects the main aspects of crowdfunding financing in the Russian Federation. The significance of crowdfunding in the implementation of projects, in particular in the social sphere, has been determined. The analysis has been presented and statistics of the most popular crowdfunding services has been displayed. The structure of crowdfunding financing by areas, country of ownership of users of the investment platform Planeta.ru has been considered. The factors have been reflected and the main vectors of the development of crowdfunding as a full-fledged financing mechanism in modern conditions have been formulated.

FAKTOR-FAKTOR YANG MEMENGARUHI INDIVIDU DALAM MENGGUNAKAN PEER TO PEER LENDING DAN EQUITY CROWD FUNDING DI DKI JAKARTA

Financial Technology (Fintech) is rife in finance. Fintech giving advantages to users such as efficiency, and also capable to increase financial inclusion in Indonesia. Peer to Peer Lending service, and Equity Crowdfunding are currently becomeing a trend. The research purpose is to find out what factors influencing individuals in using these digital financial services. This research was conducted in DKI Jakarta by collecting 349 respondents consisting of various demographic characteristics and using the Purposive Random Sampling sampling method. The variables used in research are adaptations of the UTAUT (The Unified Theory of Acceptance and Use of Technology) theory. The results obtained in the form of Performance Expectant Variables and Effort Expectancy have a positive and significant effect on Behavioral Intention of Peer to Peer Lending Services, while Social Influence, Trust, Reputation, and Self Efficacy variables have no positive and significant influence on Behavioral Intention of Services Peer to Peer Lending. Then for Equity Crowdfunding Services the results obtained in the form of Performance Expectancy Variables have a positive and significant effect, while the other 5 variables namely Effort Expectancy, Social Influence, Trust, Reputation, and Self Efficacy do not have a positive and significant effect on Behavioral IntentionKey Words : Fintech, UTAUT, Peer to Peer Lending, Equity Crowdfunding, Performance Expectancy, Effort Expectancy, Social Influence, Trust, Reputation, Self Efficacy, Behavioral Intention.

Die neue EU-Crowdfunding Verordnung

Das Gesetzgebungsverfahren fur eine Verordnung uber Europaische Crowdfunding-Dienstleister fur Unternehmen (ECSP-VO)1) wurde mit dem Vorschlag der Kommission vom 8.3.2018 eingeleitet. Doch erst nach 28-monatiger Verhandlungsdauer und mehreren Abanderungen im Trilog fand ihr Inhalt auch die Zustimmung des Rates der Europaischen Union.2) Die ECSP-VO wurde als Verordnung (EU) 2020/1503 am 20.10.2020 im Amtsblatt der Europaischen Union veroffentlicht und gilt seit 10.11.2020. Mit der ECSP-VO wird eine neue und einheitlich anerkannte Lizenzkategorie fur Crowdfunding-Dienstleister (Schwarmfinanzierungsdienstleister) geschaffen, die mittels EU-Pass grenzuberschreitend tatig werden konnen. Sie legt einheitliche Anforderungen an die Erbringung von Crowdfunding-Dienstleistungen, an die Organisation, die Zulassung und die Beaufsichtigung von Crowdfunding-Dienstleistern, an den Betrieb von Crowdfunding-Plattformen sowie an Transparenz und Marketingmitteilungen in Bezug auf die Erbringung von Crowdfunding-Dienstleistungen in der Union fest. Ziele der ECSP-VO sind die Beseitigung der Fragmentierung des Rechtsrahmens fur Crowdfunding-Dienstleistungen im Interesse eines reibungslos funktionierenden Binnen marktes fur diese Dienstleistungen, die Erleichterung der grenzuberschreitenden Finanzierung von Unternehmen, die Verbesserung des Anlegerschutzes und der Markteffizienz sowie der Aufbau der Kapitalmarktunion. Dieser Beitrag liefert einen Uberblick uber den Anwendungsbereich und die wesentlichen Eckpunkte der ECSP-VO.Stichworter: Crowdfunding, Schwarmfinanzierung, AltFG, MiFID, AIFMD, Kapitalmarktunion, CrowdinvestingJEL-Classification: K 22.https://doi.org/10.47782/oeba202012086801The legislative procedure for a regulation on European Crowdfunding Service Providers for Business (ECSP-Regulation) was initiated with the proposal of the Commission of 8.3.2018. But it was only after 28 months of negotiations and several amendments in the trialogue that its content was also approved by the Council of the European Union. The ECSP-Regulation was published as Regulation (EU) 2020/1503 on October 20, 2020 in the Official Journal of the European Union and has been in force since November 10, 2020. The ECSP-Regulation creates a new and uniformly recognized license category for crowdfunding service providers who can operate across borders using an EU passport. It lays down uniform requirements for the provision of crowdfunding services, for the organization, authorization and supervision of crowdfunding service providers, for the operation of crowdfunding platforms and for transparency and marketing communications with regard to the provision of crowdfunding services in the Union firmly. The aims of the ECSP-Regulation are to eliminate the fragmentation of the legal framework for crowdfunding services in the interests of a smoothly functioning internal market for these services, to facilitate cross-border financing for companies, to improve investor protection and market efficiency, and to establish the Capital Markets Union. This article provides an overview of the scope and the essential cornerstones of the ECSP-Regulation.

Normas de protección del inversor en plataformas de financiación participativa para empresas en el Reglamento 2020/1503

Throughout this paper we will analyze the investor protection regime on crowdfunding platforms for business introduced by Regulation (EU) 2020/1503 of the European Parliament and of the Council of 7 October 2020 on European crowdfunding service providers for business, and amending Regulation (EU) 2017/1129 and Directive (EU) 2019/1937.

THE ROLE OF INVESTMENT-BASED ISLAMIC CROWDFUNDING FOR HALAL MSMEs: EVIDENCE FROM INDONESIA

Investment-based crowdfunding can be used as an alternative financing tool for Micro, Small and Medium Enterprises in Indonesia. Since the population in Indonesia is dominated by Muslim, Islamic financial technology companies that provide crowdfunding services are continue to emerge and develop. The development of these services also encourages the progress of the halal industry because both have integrated relationships. However, not all funding campaigns for crowdfunding services are successful. This study aims to analyze the development of Islamic crowdfunding business in Indonesia and factors affecting the success of funding campaigns in these services using multiple linear regression methods. Primary data obtained through interviews and literature review while secondary data is collected from 39 funding campaigns in 4 Islamic crowdfunding online services. It was found that the regulation of Islamic financial technology did not yet exist though in practice it was already widely found. On the other hand, crowdfunding models in Indonesia still need improvement in its scheme. By using a quantitative approach, it was found that funding target, campaign duration, payback periods and rate of return have a positive effect on campaign success, while a minimum amount of investment has a negative effect which means the minimum amount of investment available in the crowdfunding service is appropriate. After conducting research with a qualitative and quantitative approach, SWOT analysis was conducted at the end of the study to find out the challenges and opportunities for the halal industry in utilizing such Islamic crowdfunding service.

'What to Expect when You Are Expecting' a European Crowdfunding Regulation: The Current ‘Bermuda Triangle’ and Future Scenarios for Marketplace Lending and Investing in Europe

Marketplace lending and investing have been recently attracting increasing regulatory attention. However, regulatory responses to such phenomenon have been extremely varied, even in Europe, characterized by maximum harmonization in the field of financial regulation, continuous efforts in creating a single market and in centralizing supervision. Such fragmented framework poses the risk of different levels of investor protection in Europe, regulatory arbitrage, competition distortions, obstacles to cross-border activity and to existing EU passports. The European Commission, after an initial “wait-and-see” approach, adopted in March 2018 a proposal for a Regulation on European Crowdfunding Service Providers (ECSPs) for businesses. Such proposal, nonetheless, has undergone a number of significant revisions during the trilateral negotiations among the European Commission, the European Parliament and the Council of the European Union, underlying the ambiguous nature of crowdfunding and the complexity in reaching a common view on the same. The three European Institutions seem in fact to have divergent views of crowdfunding and different ideas on how to regulate it, this delaying the approval of the proposed Regulation. Will crowdfunding eventually escape such Bermuda Triangle receiving adequate regulation or is it destined to die in the process? The present paper, after briefly describing crowdfunding main features and regulatory trends in Member States, will critically analyze the ECSPs Regulation Proposal, with respect to all the three different versions, inferring from each text a different vision (and consequent envisioned regulation) of crowdfunding and of financial regulation in general, underlying their pros and cons and proposing adjustments to reach a functional, tiered and proportional regulation. Finally, after mentioning certain recent revisions in national crowdfunding laws (e.g. in Italy, Belgium, UK and Germany), the paper will conclude trying to forecast the future direction of the ongoing trilateral negotiations and the possible impact of the European Regulation on national crowdfunding laws and the sector.

DEVELOPMENT OF CROWDFUNDING AS AN INNOVATIVE METHOD OF SOCIAL PROJECTS FUNDING

The search for alternative sources, such as the use of crowdfunding, becomes reasonable under the conditions of funding shortage. International experience study, peculiarities of crowdfunding usage and the development of scientific and methodological approaches of its adaptation to Ukrainian realities are relevant to research. The objective of the article is to generalize theoretical aspects and to study the experience of practical implementation of the co-financing principles in Ukraine and in the world, to identify the factors that influence the development and efficiency of the crowdfunding services. The article deals with the issues of introducing an innovative method of fundraising; it is crowdfunding, which allows carrying out co-financing of various projects that mainly have a social orientation. Studies show that in most cases, the Crowdfunding funding schemes are used in creative activities, social projects, educational projects, projects aimed at the implementation of innovative information technologies, environmental projects, sports projects, business projects, and political projects. The meaningful notion of the crowdfunding and its classification features are investigated and specified, its strengths and weaknesses are analyzed. The international experience of the crowdfunding platforms operation is considered. Analysis of statistics on the development of crowdfunding shows a significant increase in its popularity over recent years, due to the high availability of this funding scheme, and makes it possible to involve a wide range of small investors who are interested in the end result.The promising directions of crowdfunding services development in Ukraine are determined. Particular attention is paid to the analysis of the possibilities of use of crowdfunding in the social sphere.The study shows that crowdfunding has a significant potential for development in Ukraine and should become an alternative to traditional sources of funding, especially in the social field.

Modeling and forecasting development trends for crowd-funding services in Russia

Development of alternative methods of investing, in particular, crowd-funding and its different types, is, without any doubt, an international driving force of entrepreneurship which Russia can’t ignore anymore and lose advantages from their implementation. The issue of development of crowd-funding services in Russia is considered in the article. Directions for developing crowd-funding, forecasting of the volume of the crowd-funding services market are presented in the article on the basis of correlation-regression analysis, also well-known platforms for crowd-funding are considered there. As a result of the analysis it is getting obvious that further such trends will gain momentum and scale out. Crowd-funding in Russia has already overcome the threshold of establishing and, for the moment, active growth is observed which doesn’t stop even during the economic crisis. Therefore, the state can’t ignore it anymore and that is why it actively tries to incorporate into this market. Not only as the main observer but the main regulator of crowd-funding relations. As crowd-funding in Russia is a relatively young phenomenon, ecosystem is not completely formed up in it. Thus, the authors note that crowd-funding is getting more interesting not only for young businessmen, startups and representatives of the state level, but it also arouses great interest in representatives of large brands. Further, such trends will only gain momentum and scale up.

Value proposition as a framework for value cocreation in crowdfunding ecosystems

The aim of this article is to explore whether the ecosystem approach is required to understand the new service model of crowdfunding. The value proposition approach offers different interpretations for each of the eight levels of value co-creation as seen in the service ecosystem. A qualitative multiple case-study approach is used to analyze the two most representative crowdfunding platforms in Spain, Verkami and Lánzanos, in terms of the amounts of funds provided. This article offers an analysis of specific cases of crowdfunding in the arts and cultural sector through the biggest platforms in Spain. The sampling design could be improved by including the experiences of crowdfunding projects in other countries in the analysis. The findings could assist service managers and practitioners to improve planning of value cocreation through the value propositions approach, with a variety of actors within the service ecosystem. This article is a contribution to the development of service-dominant (SD) logic in relation to FP 7 and FP 10. Managerial contributions include the development of a crowdfunding service ecosystem model for arts managers, which offers not only a method of generating finance or economic value but also opportunities for strengthening bonds with customers and other stakeholders. This article is unique in that it integrates value proposition categories in micro-, meso-, and macrocontexts and analyzes the different kinds of cocreation that exist in the crowdfunding context.

Crowdfunding in East Africa: Regulation and Policy for Market Development

Earlier in 2016, DFID-funded FSD Africa partnered with the Cambridge Centre for Alternative Finance (CCAF) and Anjarwalla & Khanna to conduct a regulatory review of different crowdfunding models across Kenya, Tanzania, Uganda and Rwanda. Crowdfunding is fast taking shape across East Africa - particularly non-financial return based models such as rewards and donations crowdfunding. However, return-based equity and loan-based crowdfunding are really only starting to emerge. Such FinTech models require careful and considerate attention from financial regulators in East Africa to catalyse and harness their potential positive economic and social benefits whilst addressing systemic and consumer risks and challenges. This report highlights some key priority regulatory and policy areas necessary for market development in Kenya, Uganda, Rwanda and Tanzania while drawing on insights & experience from the UK, the USA, Malaysia, New Zealand and India. New crowdfunding regulations in East Africa are not recommended at this time. Instead, other regulator-led, market development initiatives should be considered including: A living database of all, existing, regulator-acknowledged platforms in East Africa. Regulator engagement opportunities - to bring together the East African crowdfunding industry, practitioners, experts, potential funders and fundraisers. Develop a regional regulatory laboratory or 'Sandbox' to guide crowdfunding businesses through the relevant regulatory processes and requirements. Regulators should encourage the East African crowdfunding platforms to build a regionally-focused industry association to undertake self-regulation and institute guidelines and principles to foster innovation while protecting investors. The report goes into a great deal of depth covering markets in East Africa and other more established crowdfunding markets. It also provides useful guidance for crowdfunding platforms that are seeking to establish operations in these countries as well as hopefully encouraging platforms operating elsewhere to consider East Africa as a market to provide their innovative financial crowdfunding services. We would like to thank the large number of contributors who have made this research possible including a wide array of regulators from the Capital Market Authorities, Central Banks and Communication Authorities of Kenya, Rwanda, Uganda and Tanzania as well as the host of experts, crowdfunding platforms and other policymakers that have generously provided their expertise and insight.

The value of information disclosure and lead investor in equity-based crowdfunding

PurposeHow to free the potential power of the capital market while simultaneously protecting the investors is critical in equity-based crowdfunding. To realize these goals, the purpose of this study was to investigate the value of information disclosure and leader-follower mechanism which have been widely adopted by crowdfunding platforms.Design/methodology/approachBased on the Elaboration Likelihood Model (ELM), a research framework was developed. Then, the authors conducted an in-depth exploratory empirical study of Dajiatou (www.dajiatou.com) which is a typical equity-based crowdfunding service provider in China. Independent-samplest-test and linear regression were used to uncover the value of project information disclosure and the lead investor in terms of fundraising performance improvement.FindingsFirst, the quality of entrepreneurial team information, especially the ratio of full-time staff, staff number and enterprise business age, significantly improve fundraising performance. Second, entrepreneurs’ behaviors, including project updates and project video, play important roles in crowdfunding. Third, whether or not the project has a lead investor, leader’s credibility information and his/her advocacy behaviors – percentage of their investment, identity certification, investment experience and comments for projects – are important factors affecting fundraising performance.Research limitations/implicationsThe authors are one of the firsts to apply ELM to investigate the effects of diverse information on fundraising performance in equity-based crowdfunding. The value of lead investor which has been ignored in prior research was studied through second-hand data.Practical implicationsFirst, an equity-based crowdfunding platform should request the entrepreneur to disclose project quality-related information with more details. Second, crowdfunding platforms should set a high qualifications level for lead investor, and limit the lead investor’s committed percentage in a specific project.Originality/valueThis paper extended the research in crowdfunding by uncovering the value of information disclosure and lead investor based on ELM theory.

Crowdfunding in Japan: Current Regulation and the Future of Business

This paper surveys crowdfunding in Japan. After observing the history of crowdfunding in Japan, the paper categorizes crowdfunding services into several types. Each type of crowdfunding service is subject to different regulation framework with various regulatory purposes. The paper also provides a reflection on the future of crowdfunding business in Japan and its regulation. Specifically, the paper argues the effect of 2014 reform of Japanese securities regulation which has enabled equity crowdfunding platform business.

Equity Crowdfunding and Peer-to-Peer Lending in New Zealand: The First Year

Raising funds from public investors through equity crowdfunding and peer-to-peer lending was legalised in New Zealand in April 2014. The following year saw the registration of six new financial service providers offering financial crowdfunding services, mainly in equity crowdfunding. With only one peer-to-peer lender operating there is still a lot of room for that market to develop, in particular through the introduction of alternative pricing models, larger loans and business lending. While there are five registered platforms equity crowdfunding is currently dominated by two, The Snowball Effect and Pledgeme, each serving distinct market segments. However, if Australia adopts similar rules it will allow crowdfunding platforms targeting both markets an opportunity to take advantage of a larger crowd, changing the competitive environment.

Sharing Economy vs Sharing Cultures? Designing for social, economic and environmental good

This paper explores the story behind a crowdfunding service as an example of sharing technology. Research in a small neighborhood of London showed how locally-developed initiatives can differ in tone, scale, ambition and practice to those getting attention in the so-called sharing economy. In local accounts, we see an emphasis on organizing together to create shared spaces for collaborative use of resources and joint ownership of projects and places. Whereas, many global business models feature significant elements of renting, leasing and hiring and focus only on resource management, sometimes at the expense of community growth. The service we discuss is based in the area we studied and has a collective model of sharing, but hopes to be part of the new global movement. We use this hybridity to problematize issues of culture, place and scalability in developing sharing resources and addressing sustainability concerns. We relate this to the motivation, rhetoric and design choices of other local sharing enterprises and other global sharing economy initiatives, arguing, in conclusion, that there is no sharing economy, but a variety of new cultures being fostered.

Trillion Fund seeks to disrupt the paradigm

TRILLION FUND is the British crowdfunding platform that specialises in raising money for renewable energy projects worldwide – and which has just reached a landmark of its own. The platforms merger with Buzzbank, which focuses on the social enterprise sector, is set to create the UK's largest social crowdfunding service. Trillion Fund is here to create the opportunities to make a decent return on an investment whilst giving a little bit back to the environment at the same time.