Chapter 10 Crowdfunding

Crowdfunding is.....

• Raise funds through an online platform

• collect small contributions from a large group of people online

• Raise funds through a financial intermediary

• collect financial resources to deforest the mountains and build high-rise buildings in the middle of the zoo

The benefits of crowdfunding are ..........

• Create a community that shares the same dream with the creators to support their goal

• The driver to pool the resources from a community is to fulfil the dreams that are otherwise too conservative for the traditional gatekeepers

• Set up projects or businesses that are beneficial to the society or the environment

• Seeking funds from other groups of investors aside from the professional ones.

The following are the types of crowdfunding EXCEPT..........

• Reward Crowdfunding

• Equity Crowdfunding

• Donation Crowdfunding

• Peer-to-peer lending

• Payment Crowdfunding

Which of the following statements is incorrect?

• Equity crowdfunding compensates the investors with the shares of ownership in the company whilst reward crowdfunding compensates the backers with gifts such as products in exchange for their pledge.

• Reward crowdfunding compensates the investors with the shares of ownership in the company whilst equity crowdfunding compensates the backers with gifts such as products in exchange for their pledge.

Why are contributors to reward crowdfunding (RCF) campaigns known as backers instead of investors?

• Creators of RCF get to raise funds without giving up any shares in their company, they will only deliver rewards instead of equities as compensation

• With fewer regulations involved, creators of RCF have fewer barriers to launching the RCF campaign because less intensive checks from CF platforms

• Customer engagement in RCF campaigns is useful to provide creators feedback on the products from the backers

Compared to equity crowdfunding (ECF), why RCF is often used to raise smaller amounts of funds and incurred fewer expenses?

• Creators of RCF get to raise funds without giving up any shares in their company, they will only deliver rewards instead of equities as compensation

• With fewer regulations involved, creators of RCF have fewer barriers to launching the RCF campaign because less intensive checks from CF platforms

• Customer engagement in RCF campaigns is useful to provide creators feedback on the products from the backers

Aside from focusing in raising funds using RCF, how do the creators improve their product design?

• Creators of RCF get to raise funds without giving up any shares in their company, they will only deliver rewards instead of equities as compensation

• With fewer regulations involved, creators of RCF have fewer barriers to launching the RCF campaign because less intensive checks from CF platforms

• Customer engagement in RCF campaigns is useful to provide creators feedback on the products from the backers

Compared to RCF, ECF .....

• Raise more money than RCF

• suitable for a variety of businesses that are not tangible or not focusing on merely product development

• Easier to market its campaign launched with typically very few ECF campaigns live on the platform, thus grabbing attentions from the potential investors

• Gain more insights into the backers' background upon receiving their contributions to delivery products

• Relationship with investors is usually longer than the relationship with backers

Both RCF and ECF receive feedback on their campaigns launched on the CF platforms but why does ECF tend to get more scrutiny in this process?

• Stakeholders will be critically evaluating the business as an investment proposition before launching the campaign

• ECF investors need to know the shareholding policies in the company after their investments

• ECF businesses may be liquidated in the future

• Setting up shareholder agreement, company constitution and share structure

A target investment amount is ........................ while the maximum investment amount is ........................

• the minimum amount needed to be raised for the offer to successfully close, the maximum amount of money the company will accept

• the maximum amount of money the company will accept, the minimum amount needed to be raised for the offer to successfully close

• the maximum amount needed to be raised for the offer to successfully close, the minimum amount of money the company will accept