New Funding Method Is Sustainable And Appropriate For Such Projects

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As the influence of the internet and other digital communication advances into society as a whole, businesses and individuals can access finance in new ways than before. Crowdfunding allows founders of for-profit, artistic, and cultural ventures to fund their efforts by drawing on relatively small contributions from a relatively large number of individuals using the internet, without standard financial intermediaries (Mollick, 2014). Crowdfunding varies enormously in terms of the size and scope of the projects, and the range of different uses (from arts & craft to technology). In this essay, I shall examine crowdfunding in technology projects and whether this new funding method is sustainable and appropriate for such projects. There is an…show more content…
Raising the necessary funds to finance a project would involve needing as large a network as possible if the finance was not initially available. Banks would be unwilling to lend a large sum of money if the project was unproven somewhere else, so new ideas would be tricky to justify if there is no existing market. Crowdfunding is essentially extending a personal network to a huge potential audience who, if the project idea is popular, may be willing to help with financing it. If popular, this can be taken as proof of a market existing for a particular project, which may mean banks are more willing to provide funds to help with the development of the product. The most popular website dedicated to crowdfunding is Kickstarter, which in turn means projects shown on this site are exposed to the greatest audience possible and therefore should be most likely to succeed. Crowdfunding is difficult to define, as it is such a recent innovation with a plethora of different uses. Schwienbacher and Larralde (2010), define crowdfunding as “an open call, essentially through the Internet, for the provision of financial resources either in form of donation or in exchange for some form of reward and/or voting rights in order to support initiatives for specific purposes.” Mollick (2014) argues though that aspects such as the goal of the crowdfunding effort and the goal of the investors are ignored in this
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