Which of the following accurately describes a major advantage to crowdfunding

Conclusions

Crowdfunding platforms play a significant role for individuals who are interested in having their projects funded and for those who want to contribute to make real the ideas generated by others.

Platforms such as Indiegogo and Kickstarter present projects in a detailed manner, allowing users to contact authors and to explore links where past works are available. The possibility for contributing to a project with small quantities of money offers users the chance to collaborate with initiatives of their interest.

People coming together and collaborating to achieve an objective is a normal thing. In the physical world, family, neighborhood, and friends often come together with common objectives. The Internet has made social networks grow from a small number of groups that are typically familiar to one another, to an infinite set of possibilities. Our contexts for interaction have multiplied along with the possibilities to share emotions and to perform actions.

In this chapter, we have identified some of the changes that happened in global cultural industries since the widespread use of the Internet. We also presented information and provided a discussion of how shared emotions and motivations have utterance in cyberspace through crowdfunding projects.

Internet-based crowdfunding as a social media platform provides an environment where the ease of communicating facilitates the apparition of new contexts for interaction and the creation of space to present emotions are based on shared interest and shared motivations. In this chapter we identified some of the elements which allow users of these platforms to share emotions by grouping them into four mainstream contexts whereby the online crowdfunding platforms studied are articulated: user profile, project, author, and update. In future works we can apply the type of analysis done here to other types of platforms intended for generating other types of collaboration between users.

2.2 Crowdfunding platform in a centralized system

In this type of crowdfunding platform, there is a need for a trusty relationship between the product team and the supporters. The product team expects that their fund gets paid on the basis of project progress and whenever some event completed then, they will get paid by the supporters. Similarly, the supporters expect that their fund is going to the right project or if the project gets crashed in between then, they will get back their fund from the product team.

Here, the crowdfunding platform is working as a middleman as shown in Fig. 6. They take significant charges from the product team as well as from the supporters. So, in a centralized platform, a need of trust and provides a significant amount of charge to middleman because it maintains the risk factors such as- project might not get completed, supporters may claim not to support the project further.

4.1 Limitations of the crowdfunding

Crowdfunding offers major advantages to the inventors and the entrepreneurs. It adjusts the process of investment even if it is a business, an invention, or work. It gives life to new products but there are some faults with this method that are described as follows.

The platform cash-grab: Every crowdfunding platform is dependent on one or more devoted crowdfunding platforms. These platforms do not provide free opportunities for people to join the projects. They take enough fees from people for joining the projects under the crowdfunding. However, the inventors who have a critical level of funding of projects can be a major point on this side.

Rules and regulations: Most of the crowdfunding platforms serve as gatekeepers for the projects they fund. These projects must follow some rules and regulations. For example, on Kickstarter, every project must create something that shares with others. It must be honest and clearly understood. It cannot fundraise for charity, offer equity, and involve prohibited items.

The burden of marketing and advertising: Making good ideas for the project under the crowdfunding platform does not provide a guarantee of success. To attract new people to the project, you should know how to make the crowdfunding page more visible. For advertising, marketing, branding, and strategies like search engine optimization for the projects is a practical requirement. However, it takes time from the actual invention or business but it is helpful to make projects more popular.

Empty promises: Most of the crowdfunding agencies contribute money in exchange for a promise. Unfortunately, those promises can be broken. People never get the products they paid for years ago. Often, they forget about their contributions, so they never end up taking legal recourse.

Copyright vulnerability: Some inventors and creators have seen their entire project under the crowdfunding before they got a chance to start production. When their ideas got popular on the circuit, the entrepreneurs got inspired and rushed to bet them in the market. Even with copyright, they may only be giving more ideas and more inspiration to our top competition.

4 New Financing Tools and Money Laundering

4.5.2 The Key Supporting Role of Technology and ICTs

Internet and ICTs provide online possibilities to meet the above mentioned requirements (namely, access to capital, protection of intellectual property, and networks and cooperation), serving not only as means of communication, but also giving the opportunity for different degrees of interaction for stakeholders. Some crowdfunding platforms exist allowing SMEs access to financial resources. Examples are innovation place, a platform that supports OI projects and provides them a network for partners, or Seedmatch, a more traditional crowdfunding platform where founders can get financial capital, the know-how of investors and benefit from less effort through standardized contracts and processes. OI platforms also allow avoiding traditional, bureaucratic, and expensive processes of patenting, respecting the rights of the ideas of the owner and making the process cheaper and accessible for SMEs. Finally, collaboration in virtual teams may reduce costs, time, and effort in order to get products to market.

The expansion of the Internet of the things (IoT) is one of the trends pointed out since 2015. IoT has affected also the food industry in different ways. First, IoT represents for food companies an opportunity to optimize and improve supply chain and manufacturing process (by embedding interactive technology in key machines and automation), as well as equipment and processes in real time. Second, food producers more and more have to work in a rapidly changing environment due to the rapid changes in markets and in consumers’ buying behavior. IoT allows food producers on the one hand to better communicate with their consumers, thus addressing their needs, and suppliers, thus sharing the required resources with them. On the other hand, IoT permits food companies to obtain greater adaptability, flexibility, and risk reduction. Third, IoT allows meeting consumers’ needs in terms of health and security. Indeed, numerous gadgets exist with the aim of improving consumer health, by measuring the calories they eat or ensuring the safety of the foods (e.g., Quirky’s Egg Minder or HAPIfork). Finally yet importantly, the relationship between buyer and seller has changed due to the numerous devices connected to the Internet. Restaurants, for example, should provide their customers with tools, such as QRcode, allowing them to see, starting from the menu, the history of a TFP, its recipe, its ingredients, and their traceability, etc.

The rapid development and adoption of Internet, ICTs and digital technologies are dramatically changing business processes, leading to a digital transformation (referred to with the term industry 4.0) of the whole chain. These factors are changing also traditional food chain. In the food context, Industry 4.0 means new technologies and new skills in agriculture, R&D, new or innovative food machinery. In this context, the rapid development of these technologies has allowed the emergency of the expression Food 4.0, indicating their application to the food chain. The main aim of Food 4.0 is the improvement of all the businesses processes, both internal and external, with a particular focus on the consumer.

It is thus possible to conclude that, if on the one hand technologies and ICTs in general lead food companies (also the traditional ones) toward the digital transformation, on the other hand they also improve the information about food and aliments. They do not replace the TFP, but if adequately adopted, may improve it. The trend seems to be to integrate the old with the new: old TFPs have to be integrated with new TFPs (rapid dishes to be prepared, ethnic foods, produced with positive impact on the public health and on the general quality of the life and on the environment). Food innovation has to see toward the transformations of society, the changes in habits, the religious, ethical and ethnic needs, but without the link with the cultural and culinary heritage that passed from generation to generation. By broadening the conceptualization of OI it is possible to look at ways in which the art and the science of artisan production might be reconciled.

Crowdfunding

An accepted definition of crowdfunding is “the use of small amounts of capital from a large number of individuals to finance a new business venture. Crowd funding makes use of the easy accessibility of vast networks of friends, family and colleagues through social media websites like Facebook, Twitter and LinkedIn to get the word out about a new business and attract investors.”64

The idea of gathering small amounts from many to accumulate to a desired total is not new. Justin Kazmark, in the Kickstarter Blog, gives us three early examples of what he calls “Kickstarter before Kickstarter.”65 The first deals with praenumeration, a subscription business model that Alexander Pope used to finance the print run of his translation of more than 15,000 lines of Greek poetry into English in 1713. Apparently he was a success after 750 subscribers pledged two gold guineas each to support Pope’s project and see their names acknowledged in the book. Note: Most of us want to know what does two guineas worth in today’s U.S. dollars? That is difficult to calculate because guineas do not exist anymore.66 But this is an important risk and security point—do transactions in hard currency that have and will be around are easy to convert and liquidate. This is a cautionary issue for those dabbling in the new digital currencies.

The second example we get from Kazmark is Mozart, who in 1783 wanted to perform three piano concertos he had just composed in Vienna. He offered copies of the manuscript in exchange for the pledges of support. His first try did not succeed, but in 1784 he was able to raise the money he needed from 176 backers. Lesson learned: don’t give up. Try again.

The last example is the Statue of Liberty Pedestal Fund.67 In 1884, the Statue of Liberty, a gift from the French people to the United States, was built but had no place to display it because the American Committee for the Statue of Liberty ran out of funds. Joseph Pulitzer, publisher of The New York World, urged his readers to support it. He raised more than $100,000 from donations, most of which were less than a dollar each. Lesson learned: Make the project relevant.

The current rendition of crowdfunding occurred in 1997 when a rock band from Britain called Marillion asked for donations online to fund a reunion tour.68 It proved a successful method and led to the first official crowdfunding site, ArtistShare, in 2001, “a platform that connects creative artists with fans in order to share the creative process and fund the creation of new artistic works.”69 The next significant site would be IndieGogo70 in 2008, followed closely by Kickstarter in 200971 started by Perry Chen, Yancey Strickler, and Charles Alder. Today there are a number of crowdfunding platforms and sites, some focusing on specific niches, such as creative projects, and new ones focusing on equity and entrepreneurship, such as Fundable72 (see Box for additional crowdfunding sites).

CROWDFUNDING SITES

Appbackr: //www.appbackr.com

Fundable: //www.fundable.com

Gofundme: //www.gofundme.com

IndieGogo: //www.indiegogo.com

Kickstarter: //www.kickstarter.com

Razoo: //www.razoo.com

RocketHub: //www.rockethub.com

Marketing Moxie Biz has compiled a list of more than 500 crowdfunding sites with comparisons of features, urls, and more. You can access that list here: //marketingmoxie.biz/the-big-list-of-crowdfunding-sites/. Keep in mind that like other businesses, crowdfunding sites do close and so it is important to do your research before using a particular site to ensure it is credible and will not terminate when you are in the middle of a campaign. Review their terms of use and any legal language they may have posted. Review past and current campaigns and speak to a few users to see what their experience has been.

The crowdfunding concept has been caught up in doubts in terms of its legality and compliance with The Securities Act of 1933 and the Securities Exchange Act of 1934, both of which put restrictions on who can invest in a business endeavor and the procedures to follow to register, promote, administer, and report on the fundraising. Two of the key elements were who would be deemed a qualified investor and the prohibition of general solicitation (“public advertising or other public statements regarding a securities offering”73 under Rule 506 (c)). Kickstarter and other crowdfunding sites state that “Project creators keep 100% ownership of their work, and Kickstarter cannot be used to offer equity, financial returns, or to solicit loans.”74 In other words, Kickstarter is not an investment platform and therefore not subject to SEC and related regulations. People who “pledge” to support a project on Kickstarter receive rewards, different rewards for different levels of support. But this general legal clause did not reassure everyone about the legality of requesting financial support via social media and other online channels. These platforms also put up a wall through password and account registration to “screen” accredited investors—or those with whom there is a preexisting relationship trying to offer more protection against compliance violations.

In 2012, President Obama signed the Jumpstart Our Business Startup (JOBS) Act75 that exempts from registration sales of securities directly to the public through a “crowd-fund portal.”76 Three sections of the Act refer specifically to crowdfunding and how one would qualify:

Title II Accredited Crowdfunding

An issuer needs to maintain a clear policy regarding the promotion of its crowdfunding offering and actively manage the social media campaign it launches,

The issuer must disclose and include language in the promotion about compensated endorsements for the offering (who and what they receive),

Antifraud rules still apply so no material misstatements in connection with the offering, and

You must make sure all information you put out regarding the offering is accurate and not misleading

Title III Retail Crowdfunding

Does not allow general solicitation

Use of advertising and promotional materials strictly limited

Put a notice advertising that the offering: the only information allowed it that the issuer is conducting an offering

The name of the intermediary with a link to the platform (can only use one)

Terms of the offering

Factual information about the legal identity and business location of the issuer

You can publicize the notice through media channels

Same paid promotions disclosure and antifraud rules apply

Title IV Registered Crowdfunding

In proposed stage, Regulation A

Offering is quasiregistered

General solicitations are allowed before registration as “testing the waters” activities; offering materials must be files 21 days before the sale of any security

The JOBS Act does not clarify all questions and concerns regard crowdfunding. Doubt has been cast as to whether Facebook friends, Twitter followers, and so on, are sophisticated investors fully knowledgeable in what they are about to invest in or are they vulnerable to fraud and scam projects? Also most of the Act requires only basic disclosures leading to the question of how informed can an investor really be when it comes to deciding to fund a project. Some sites, such as Kickstarter, require those seeking funds to do a minimum number of updates and notices to those who are pledges to keep them informed of the progress of the project and the fundraising campaign. Another question that comes up is when does a friend become a stranger in the social media world? Is a friend of a friend who is also my friend a direct solicitation even though the friend did not get the notice directly from me? Is a friend of a friend of a friend of a friend who I do not know still a qualified investor? Does it matter now with the JOBS Act? These still need to be clarified and we still don’t have those clarifications from the SEC even though they were due last year.

Because the clarifications have not come through yet, some states took matters into their own hands and passed laws governing crowdfunding in an intrastate model—meaning only investors and transactions within the state itself and restricted to residents of the states. One such state is Georgia and the Invest in Georgia Exemption (IGE), an administrative rule adopted by the Georgia Commissioner of Securities in 2011, which makes possible a wide-scale distribution of solicitations to buy certain unregistered securities to Georgia residents77; intrastate crowdfunding. The IGE states that the issuer still must adhere to the federal laws, which right now has the general rule against general solicitations and continues to apply to IGE offerings. It can be quite confusing.

The crowdfunding platforms must deal with a number of security issues as well. In February 2014, Kickstarter suffered a data breach78 and user’s email addresses, phone numbers, usernames, and encrypted passwords were stolen. These platforms are also monitoring for scams or individuals who create phony projects to raise funds as well as any abuse of funds once collected, because all of these affect the reputation and credibility of the crowdfunding site itself.

Another risk with using these platforms to raise funds focuses on the IP of the project. Ideas cannot be protected, and many individuals will try to protect the idea by keeping it secret through nondisclosure agreements. These sites do not offer that and so once the idea of the project is posted and uploaded, it is there for all to see and possibly be copied although in a different tangible expression. So the conventional tools of copyright and trademark registration offers value in this online environment and should be kept in mind before too much is shared on these platforms. Understanding IP rights and having an IP strategy before launching any campaign is a prudent best practice.

A last risk to be considered is the onset of donor exhaustion. As crowdfunding becomes more popular and more of a mainstream way to raise money instead of just an alternative, people and business may get tired of the number of “pledge” requests they receive via their email in boxes, Facebook status and posts, tweets, etc. It is important to keep that in mind during the development of the campaign and the decision for pledge levels. One U.S. dollar may not seem like much but after hundreds of worthwhile projects you want to support, it adds up. And because this is based on some kind of social relationship (or friendship) friends may begin to feel abused with the onslaught of requests.

7.3.3 Foreign aid

There exist several issues and inefficiencies in the current systems that offer aid to refugees and displaced persons. Paynter [131] found that 3.5% of most international relief aid is spent as transaction fees or other related costs while an estimated 30% of all development funds do not reach the intended persons due to third-party costs, theft or mismanagement. To avoid this issue, a blockchain can be introduced to connect the donors with the final recipient avoiding third-party involvement. Usizo is a crowdfunding platform in South Africa, that has been planned to be launched where a Bankymoon meter that is blockchain-aware will be installed in rural schools and donors around the world can make payments directly to the meter using tokens and fund energy or water the school needs [132, 133]. This would enable the donors to witness exactly where their contributions were spent.

Another project was implemented by the United Nations to provide aid to the refugees in Jordan, who moved from conflict zones in Iran and Syria. In here, rather than providing aid to the refugees directly, through an Ethereum blockchain, aid is provided to a few shops (merchants) in the neighbourhood of the refugee camps. The refugee can go to a selected shop and receive the funds allocated to them by proving his/her identity through Iris Scan, where the refugee's identity details are already stored in the blockchain network.

5.10 Miscellaneous applications

This subsection refers to research describing blockchain-based applications that fall outside the domains mentioned above. For example, crowd-funding platforms are starting to use blockchain (Bracamonte and Okada, 2017; Buccafurri et al., 2017b; Zhu and Zhou, 2016). Swarm, Lighthouse, and bitFyler are examples of cryptocurrency crowdfunding platforms (Swan, 2015; Li et al., 2017). Blockchain applications may also be found in the humanitarian sector and philanthropy (Mazet, 2017), particularly as a means of fighting poverty (Kewell et al., 2017; Kshetri, 2017; Pilkington et al., 2017; Zhou et al., 2017; Larios-Hernández, 2017; Jayasinghe et al., 2017; Accenture, 2017b; Ko and Verity, 2016

Which of the following accurately describes a major advantage to crowdfunding quizlet?

Why is crowdfunding important?

What is crowdfunding quizlet?

What is crowdfunding examples?