This article first appeared in Connect magazine.
Crowdfunding is a way in which individuals and businesses raise
money to finance or re-finance their activities through online
platforms. These online platforms are often known as
"crowdfunding platforms" and they typically adopt either
a loan-based model or an investment-based model to attract a
broader range of individual funders.
Why Crowdfunding?
Crowdfunding grew out of the 2008 financial crisis and was
initially viewed by many as a short term funding solution for
businesses seeking to raise debt finance in a market place where
the traditional lending institutions were holding on to their
capital. It was particularly difficult for start-ups and early
stage growth companies to raise finance during this period. The
culture was risk averse and start-ups are, by their very nature,
perceived to be risky. However, although initially seen by many as
a short-term fad, crowdfunding is now a recognised funding
