Tan, Yee Heng, and Reddy, Srinivas K. (2019) Funding by the Masses: Crowdfunding Platforms and Their Disruption of Traditional Marketing Functions. In: Parvatiyar, Atul, and Sisodia, Rajendra, (eds.) Handbook of Advances in Marketing in an Era of Disruptions: Essays in Honour of Jagdish N. Sheth. Sage Publications, New Delhi, India, pp. 167-175.

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Abstract

Crowdfunding is an alternative model of raising funds that has leveraged on the network effects of the Internet to reach out to the masses. We look at what crowdfunding entails and the different models of crowdfunding that have developed. More importantly, we track how crowdfunding has become a disruption, not only to the finance sector but also to the marketing sector. Crowdfunding allows projects that would have failed in receiving funds a viable alternative. Crowdfunding also allows creators to provide validation, receive feedback, reach and engage with consumers and provide a direct sales channel to consumers. These roles can be utilized concurrently with traditional marketing actions. This has helped crowdfunding expand its role from a mere disruption to serving as a complement for traditional marketing actions. We address some common factors that may affect crowdfunding and provide a vision for the future of crowdfunding.

The main problem many fledging entrepreneurs face is funding. Traditionally, sources of funding included seeking out angel investors or venture capitalists and receiving grants from incubators or loans from financial institutions. However, with the advance of technology, one method has come into prominence in recent years—crowdfunding.

Crowdfunding funds projects by reaching out to a large number of investors to fund small amounts of money. It has gained widespread visibility and acceptance, growing exponentially since 2010, and has surpassed the venture capitalist industry in recent years even as it continues to grow (The World Bank 2013). With such an impressive portfolio, crowdfunding has generated much interest within private and public sectors in recent years such as the Jumpstart Our Business Startups (JOBS) Act which recognizes crowdfunding as a legitimate avenue to raise capital. Outside of the US, crowdfunding has also gained traction, with governments in countries such as the UK, the European Union, China, India, Australia and Japan recognizing the importance of crowdfunding and seeking ways to integrate crowdfunding into their legislation.

Item ID:	83342
Item Type:	Book Chapter (Research - B1)
ISBN:	9789353287733
Copyright Information:	Copyright © Atul Parvatiyar and Rajendra Sisodia, 2019. © 2019 SAGE Publications Pvt Ltd All Rights Reserved.
Date Deposited:	07 Aug 2024 02:47
FoR Codes:	35 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 3506 Marketing > 350699 Marketing not elsewhere classified @ 100%
SEO Codes:	28 EXPANDING KNOWLEDGE > 2801 Expanding knowledge > 280106 Expanding knowledge in commerce, management, tourism and services @ 100%
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