Crowd funding

This ppt is prepared as part of my participation in the International Conference on Crowdfunding.The ppt contains basic informations about crowdfunding and it's types and it's status by SEBI on India till January 2016. This ppt was prepared under the guidance of our professor MR.N.Manicka Mahesh. The ppt was compiled and the informations were sourced and collected by Miss.Rithvicca Manimaran.

1. Presented By Rithvicca M – I MBA Venkatesh D – I MBA Guided by Dr . N. Manicka Mahesh M.Com ., M.B.A, M.Phil , I.C.W.A.I Inter., Ph.D Asst. Professor School of Management SKCET, Coimbatore . CROWDFUNDING An Overview

2. IDEA FUND

3. MEANING Crowdfunding is the practice of funding a project by raising monetary contributions from a large number of people, today often performed via internet -mediated registries

4. PROVENANCE The term “crowd funding” is coined by entrepreneur Michael Sullivan . Sullivan uses the term to help explain the launch of his own project, a failed attempt to create an incubator for emerging video blogs and other projects.

5. EVOLUTION 1997 : Origin 2009 : Kickstarter Launches 2010 : Fundraise Introduces First Real Estate Crowdfunding Model. 2012 : The JOBS Act 2014 : Crowdfunding the Potato Salad 2015 : An Industry in crisis

6. TYPES

7. DONATION CROWDFUNDING Philanthropic venture Enables individuals to directly share their money with causes and projects. Sometimes they will receive a simple "thank you" or a special mention – or even a physical item such as a postcard – however, the pledge is essentially a donation.

8. Examples

9. REWARD CROWDFUNDING It involves people contributing to a campaign, and getting a tangible or intangible reward in return. Types KIA(keep it All) AON (All or Nothing)

10. PEER TO PEER CROWDFUNDING P2P is the practice of lending money to unrelated individuals, or "peers“.

11. Example

12. Example

13. EQUITY CROWDFUNDING It is the online offering of private company securities to a group of people for investment. The term equity crowdfunding is often used to describe crowd investing into both debt and equity based instruments.

14. Examples

15. Types Form of Contribution Form of Return Motivation of Funder Donation Crowdfunding Donation Intangible Benefits Intrinsic and social motivation Reward Crowdfunding Donation Pre Purchase Rewards but also intangible benefits Combination of Intrinsic and social motivation and desire for reward Peer to Peer Crowdfunding Loan Repayment of Loan with Interest Primarily financially motivated Equity Crowdfunding Investment Return on investment in time if the business does well Combination of intrinsic , social and Financial motivation

16. GLOBAL SCENARIO United states : JOBS act Canada : Canadian Securities Administrators (CSA) New Zealand : Financial Markets Conduct Act(FMCA) United Kingdom : Financial Conduct Authority (FCA) India : Security Exchange Board of India (SEBI)

17. INDIAN SCENARIO Equity crowdfunding as of now, is not possible in India, since it runs afoul of Section 42 of the Companies Act, 2013. Equity crowdfunding as a mechanism for fundraising by companies is presently being scrutinised by SEBI. However , other forms of crowdfunding viz donation, rewards and peer-to-peer lending are possible. 

18. INDIAN CROWDFUNDING PLATFORMS BitGiving Millaap Ketto.org Start51 Funddreamsindia Wishberry.in Catapult

19. Isitha Anand launched BitGiving in December  2013 Milaap disburses loan of which 100% goes to the borrowers. Milaap is not a charity where you donate money, but actually loan them to people who need it. The idea of not making people dependent, but making them independent, making them productive is fantastic.

20. Ateet Bajaj Founder- Start51

21. BENEFITS It provides access to capital . It hedges risk . It serves as a marketing tool It gives proof of concept . It allows  crowdsourcing of brainstorming . Alternative source of financing It introduces prospective loyal customers. New mode of financing to SMEs Facilitates Portfolio Diversification It’s easier than traditional applications . It provides the opportunity of pre-selling .

22. RISKS There are limited follow up mechanisms . A lot of the creators posting their projects online have good ideas and no business expertise . Tax laws governing the ecommerce environment are not clearly defined. There is no collateral as in case of Corporate Bonds. Venture Capital Funds (VCFs) and Private Equity (PE) Investors. Risk of Investor Internet Security issues.

23. Risk –Continued The risk of failure is further increased by the fact that the funding is potentially by participants who do not have the skills and experience needed to assess the risk before investing/lending. There is possibility of genuine websites being used by fraudsters claiming to be promoters of projects

24. SEBI regulatory framework A quick review of the SEBI paper gives us pointers to what the possible regulations could be. Under the proposed terms, three entities, namely, the crowdfunding platform, the investor , and the issuing company, would be regulated . Prevailing Scenario

25. The issuing company is restricted in terms of its size, the amount of funds to be raised and its age. The investor is restricted in terms of its accreditation, minimum net worth and, in case of eligible retail investors, the maximum investment that may be made overall or in a single crowdfunding event. Crowdfunding platforms are also restricted in terms of who may set them up and the checks and balances to be put in place.

26. E ffort N ever D ies Thank You