Advantages and Disadvantages of Crowdfunding for a Small Company
Gustafssson, Pontus (2024)
2024
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2024052817198
https://urn.fi/URN:NBN:fi:amk-2024052817198
Tiivistelmä
This thesis investigates the topic of early business capital acquisition, exploring the viability and efficacy of three distinct financial strategies: Crowdfunding, Debt Funding, and Equity Funding. The study conducts a holistic examination of the strengths and weaknesses associated with each method, aiming to provide valuable insight into early financial business development for entrepreneurs and startups navigating the complexity of fund raising.
Through an extensive literature review, the research seeks to illuminate the unique characteristics and implications associated with crowdfunding, debt funding, and equity funding. The analysis highlights the diverse opportunities and threats faced by each method, with intent to facilitate decision making regarding financial implications, ownership structure, and social aspects of funding.
Besides the delve into previous literature, the other central point of this study is a comparative analysis of cost-effectiveness of crowdfunding compared to debt funding. By constructing a hypothetical scenario of what a crowdfunding campaign may result in, calculations of total costs can be made and compared to assess the viability of crowdfunding. By understanding what costs to expect in running a crowdfunding campaign, entrepreneurs can make more informed business decisions.
Furthermore, the study acknowledges the evolving field that is crowdfunding, recognising potential changes in costs, taxation, and legal compliance due to new regulations in the legal frame-work surrounding donation-based funding methods. This fluctuating environment highlights the need for entrepreneurs to be observant of the economic politics when strategizing their funding methods.
Ultimately, the findings of this thesis offer valuable guidance for startups and small companies seeking alternative ways to fund their business venture, providing a holistic understanding of the benefits and challenges associated with each funding method covered. By granting entrepreneurs practical insights, this research aims to facilitate well informed decision-making while opting for a particular funding strategy to increase the chance of success in a critical stage in a business’ development.
Through an extensive literature review, the research seeks to illuminate the unique characteristics and implications associated with crowdfunding, debt funding, and equity funding. The analysis highlights the diverse opportunities and threats faced by each method, with intent to facilitate decision making regarding financial implications, ownership structure, and social aspects of funding.
Besides the delve into previous literature, the other central point of this study is a comparative analysis of cost-effectiveness of crowdfunding compared to debt funding. By constructing a hypothetical scenario of what a crowdfunding campaign may result in, calculations of total costs can be made and compared to assess the viability of crowdfunding. By understanding what costs to expect in running a crowdfunding campaign, entrepreneurs can make more informed business decisions.
Furthermore, the study acknowledges the evolving field that is crowdfunding, recognising potential changes in costs, taxation, and legal compliance due to new regulations in the legal frame-work surrounding donation-based funding methods. This fluctuating environment highlights the need for entrepreneurs to be observant of the economic politics when strategizing their funding methods.
Ultimately, the findings of this thesis offer valuable guidance for startups and small companies seeking alternative ways to fund their business venture, providing a holistic understanding of the benefits and challenges associated with each funding method covered. By granting entrepreneurs practical insights, this research aims to facilitate well informed decision-making while opting for a particular funding strategy to increase the chance of success in a critical stage in a business’ development.