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What Is Crowdfunding? Essay

713 words - 3 pages

Crowdfunding is basically the process of pooling finances from public or “crowd” where the finances are utilized to generate revenue to start a company, invent a product or for a social cause. The growing popularity of the crowdfunding technology can majorly be attributed to the social media, information technology and the cost-effective nature of the process. The government also recognized crowdfunding as a way to provide capital for underserved market areas and hence proposed the JOBS act in 2012. The act proposes regulations on how the crowdfunding should be done so as to protect all the participants involved in the crowdfunding process including the investors , ...view middle of the document...

Though the concept of crowdfunding existed even in the past, the growing popularity of the social media, usage of cloud technologies and big data has contributed to the effective usage of crowdfunding by making it feasible and easy for the general public to become a participant of the crowdfunding. However crowdfunding also comes with a few disadvantages which can be dealt with a proper framework. The ideas of an invention or a new product can very easily be stolen from the crowdfunding platform which cannot be avoided unless a patent is obtained for the product even before the necessary capital is obtained to build the product. Many companies might not want to disclose the stage of the product or the actual details of construction for the same reason and this might result in a non-transparent relation between an organisation and an investor. As the social media and cloud technologies is making it so easier for the backer to fund money, most of the times people who do not have enough knowledge on...

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