CROWDFUNDING SYSTEMS: evaluation and government regulation in the conditions of reengineering

Continuation of table 1.7 Note: formed by the authors Advantages of using crowdfunding to raise capital compared to funding by business angels and venture capital: 1. The speed of money circulation is quite high. Using crowdfunding platforms allows you to accumulate funds over a short period (30 or 60 days). 2. Publicity and openness. Crowdfunding allows you to attract media attention and increase the popularity of the project. Disadvantages of using crowdfunding over the above models are the following ( ɍɝɨɥɶɤɨɜɚ , 2017b): 1. The amount of funds is limited. The largest crowdfunding and crowdinvesting platforms are American, and according to US law, the maximum amount of funds that can be raised using such platforms is 1 million US dollars per year. For crowdfunding based on non-financial remuneration, the average amount collected by the project is about 10 thousand dollars. Companies that require more funds will have to ask financial and credit intermediaries, investors, or business angels. 2. The presence of the commission in the financing. There is no interest or fee paid for funding by business angels, however, startups using crowdfunding or crowdinvesting platforms must pay between 5% and 10% fee to receive the money they collected. 3. Lack of mentoring. In comparison with the financing by «business angels», in crowdfunding, there is a possibility of a loss of valuable guidance and mentorship. However, some crowdfunding platforms such as Indiegogo and Kickstarter provide advice and support to project authors. In North America and Europe, it is common to fund startups by business angels. Business angels are interested in helping new companies 1 2 3 4 The magnitude of the risk for contributors Low risk Medium risk High risk Term of receiving a profit 2–3 years after depositing funds 2–5 years after depositing funds 3–7 years after depositing funds The purpose of the funding for contributors Personal interest in the final result of the project + profit (sometimes) Profit + experience exchange High profit 45