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Economic Prospects and Conditions of Crowdfunding

Piotr Pazowski and Witold Czudec
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Piotr Pazowski: Maria Curie Sklodowska University, Poland
Witold Czudec: Maria Curie Sklodowska University, Poland

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Abstract: This paper aims to present the conception of crowdfunding – the relatively new idea of raising funds from individuals which is made online by means of a web platform. Intent of this method is the ability to collect, manage and distribute finance using information and communications technology in order to develop particular project in exchange for provision of benefits. Article analyses and expands knowledge about essence of crowdfunding concept, its main types and characteristics. The subject of discussion of this paper are economic conditions for the application of social financing as a source of capital. The authors objective is to juxtapose the incentives and disincentives for both creators and funders. Crowdfunding as all other methods of raising capital is an action that carries risk. Novelty of the approach is researched through the prism of values that characterises all sources of capital. This article lead to the conclusion that main value of the method is to increase the probability of obtaining more beneficial solutions from the community than from the enterprises offering outsourcing services. Well-organized process of crowdfunding can finance start-ups and increase investment opportunities especially for small and medium enterprises.

Keywords: crowdfunding; wisdom of crowds; start-ups (search for similar items in EconPapers)
Date: 2014
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