Evolution of crowdfunding platforms

Abstract

Crowdfunding has emerged as one of the leading technology-based funding solutions to provide funds to budding entrepreneurs, emerging social & cultural initiatives and innovative ideas across the globe. Internet-based applications, which have emerged in Web 2.0, have created a significant impact in sectors like health, education, arts & business due to wide reach (Alexander, 2006). Earlier, before rise of crowdfunding platforms, people were entirely dependent on banking institutions, venture capital, equity markets & other similar sources to collect funds to support an initiative. A major share of capital market was solely captured by short- & long-term lending. Typically, under these settings, small businesses and entrepreneurs were restricted from seeking necessary capital to meet their funding needs due to lack of scale, information asymmetry & lack of organisational network. This caused a large segment of people with entrepreneurial spirit remain unserved and underfunded. Empirically speaking, this must have caused many of potential businesses & entrepreneurial ideas to die down (Christensen, 2013). Crowdfunding has emerged as a boon for such funding starved businesses and entrepreneurial ideas. It is serving as a response to those unfilled needs & gaps in current capital market scenario (Christensen, 2013).