Crowdfunding

Crowdfunding is a fast growing financing and investment alternative. Primarily four different forms of crowdfunding can be distinguished, namely donation-based, reward-based, lending-based and equity-based crowdfunding. These forms differ significantly in terms of requirements, costs, return and legal restrictions. Each form also entails its benefits, challenges and risks. Entrepreneurs can benefit from a large pool of potential capital, easy access, a reduction of geographical barriers, low costs and a huge support network. However, they need to keep administrative and marketing challenges as well as the exposure of intellectual property in mind. Investors are able to diversify their investment within a large amount of business opportunities and concurrently minimize their default risk through several small contributions. Nevertheless, investors should be aware of the high risks involved in investing in start-up businesses, such as information asymmetries, business failure and fulfillment risks as well as potential fraud.

Autorentext

Christine Grabner finished her Bachelor's degree in International Business Administration majoring in Finance and International Marketing Management at the WU Vienna. 2014 she graduated the Joint Study Master's program, Global Business, at the JKU Linz, which partly took place in Canada and Taiwan.