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Crowdfunding's potential for the developing world (English)

Crowdfunding is an Internet-enabled way for businesses or other organizations to raise money in the form of either donations or investments from multiple individuals. This new form of capital formation emerged in the wake of the 2008 financial crisis largely because of the difficulties faced by artisans, entrepreneurs and early-stage enterprises in raising funds. Crowdfunding takes advantage of crowd-based decision-making and innovation, and applies it to the funding of projects or businesses. Using social networks, social profiles, and web-based communication, individuals and companies have raised billions of dollars in debt, equity, and donations for projects. Building a crowdfunding ecosystem depends on key enablers to build trust. This document explores specific strategies to drive crowdfunding, the risks in crowdfunding and how to mitigate them, and the potential use of crowdfunding in the developing world.

Details

  • Author

    Best, Jason, Lambkin,Anthony, Neiss, Sherwood, Raymond,Samuel, Swart, Richard

  • Document Date

    2013/01/01

  • Document Type

    Working Paper

  • Report Number

    84000

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    World,

  • Region

    The World Region,

  • Disclosure Date

    2014/01/16

  • Disclosure Status

    Disclosed

  • Doc Name

    Crowdfunding's potential for the developing world

  • Keywords

    entrepreneur;Finance & Private Sector Development;small and medium enterprise;Capital Market and Financial;access to the internet;small and medium size enterprise;local chambers of commerce;large amount of capital;information and communication technology;information for development program;social media;access to capital;flow of capital;inclusive economic growth;initial public offering;business plan competition;trusted third party;body of knowledge;private capital market;global best practice;foreign capital flow;sale of security;event of bankruptcy;number of investors;Broad Community Support;local financial institution;form of sector;scale and scope;subject matter expert;Innovation and Entrepreneurship;participation of woman;barrier to financing;venture capital fund;exchange of information;online social network;multilateral development bank;form of investment;automated clearing house;Special Purpose Vehicle;market for good;lack of capital;purchasing power parity;protection to investor;role of development;peer review process;degree of trust;sectors of society;business development service;cost of capital;trust service provider;adoption of information;acceptance of technology;fear of failure;average interest rate;foreign direct investment;return to investors;barrier to entry;capital formation;investor protection;business model;net worth;angel investor;individual investor;early success;technology platform;funding mechanism;license term;potential investor;potential investment;equity offering;security regulation;professional investor;online advertising;raising capital;competitive industry;Cash flow;research institutions;technological infrastructure;family finance;disruptive technology;venture capitalist;financial crisis;investment limit;common stock;debt capital;intellectual property;financial authority;financial loss;entrepreneurial finance;market size;investment platform;equity stake;peer learning;product market;technology development;support network;innovative technologies;business angel;protecting investor;technology sector;asset class;capital need;investment risk;minimum requirement;private company;Job Creation;institutional investor;alternative funding;innovative company;investment opportunities;business community;raise funds;mobile application;market penetration;traditional financing;Private Equity;academic institution;tax incentive;financial market;emerging economy;Emerging economies;diaspora community;educational material;middle-income individuals;business financing;risk capital;technology solution;lower-income individual;financial sophistication;product evolution;gray market;market testing;technology entrepreneur;cultural challenge;security law;investor perspective;creating markets;islamic finance;diaspora members;outreach campaign;capital contribution;ecosystem development;local interest;common market;online tool;foreign remittance;public company;net effect;innovative start-ups;world economic;local bank;traditional investor;short-term financing;principal payment;quality education;academic expert;maximum investment;movie star;income requirements;home countries;public corporation;technology literacy;societal development;investment allocation;cultural attitude;investor relation;Exit Strategy;private loan;long-term investment;seed financing;early adoption;weighted average;home country;middle class;short-term liquidity;venture finance;viable market;institutional forces;entrepreneurial activity;maximum benefit;funding gap;personal income;mobile payments;venture investor;small sample;market acceptance;temporary job;product flow;strategic partnerships;annual revenue;tax records;traditional investment;future research;news stories;corporate structure;investment commitment;dividend distribution;sale strategy;investor risk;capital group;fund management;equity holder;ordinary people;existing business;equity security;standard practice;similar way;senior creditor;fundraising effort;equity share;royalty interest;debt instrument

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Citation

Best, Jason Lambkin,Anthony Neiss, Sherwood Raymond,Samuel Swart, Richard

Crowdfunding's potential for the developing world (English). InfoDev Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/409841468327411701/Crowdfundings-potential-for-the-developing-world