Will SEBI’s new proposals throttle crowdfunding at birth in India?

By Raghav Hegde

Crowdfunding is a nascent industry in India, which yet to take off due to several reasons. Without a regulatory sanction from the government,  the crowdfunding industry does not enjoy legal approval, and hence, more widespread credibility with the investors – both retail and institutional. Equally critical is that India is not a technologically advanced, entrepreneur-driven country, as a result most of the crowdfunding activity is restricted to the financing of films and cultural events. The non-existence of equity based crowdfunding in the country, as most of the crowdfunding in India is rewards based or lending based, is another important reason that crowdfunding as a platform for investment is yet to take off.

Nonetheless, a lot has changed in India over the past one month.  The new BJP government has taken over at the center, with Narendra Modi as the Prime Minister. Mr. Modi is well known to be very friendly to businesses and entrepreneurs and was the Chief Minister of the state of Gujarat, which is the most entrepreneur-friendly province in the country for over twelve years previously. This is a big change from the prior administration which ruled over the country, which was distrusted by the entire business, investment and entrepreneurship community, both in India and abroad. So a lot is expected from Mr. Modi’s new government, which seems very serious on improving the investment and business climate in the country.

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The Lion City Roaring: Is Singapore leading the way in Asia with crowdfunding innovation?

By Crowdfund Vibe Staff Writers

Crowdfunding is more developed in Europe, North America & Australia/NZ, than it is in Asian countries. This situation is changing rapidly in Singapore. Crowdfunding activity has ramped up significantly in the Lion City over the past 12 months.

Like many parts of the world, various overseas crowdfunding platforms such as Kickstarter and Indiegogo have been available to residents of Singapore for some years. More recently they have been joined by the Australian-based global platform Pozible. Indiegogo has upgraded its service to  support funding in the local currency which has enhanced its appeal.

There has also been a flurry of new Singaporean crowdfunding platforms together with some notable fundraisings. The Singaporean public is starting to take a keen interest in this new business concept. It would seem Singapore may now be the trend-setter in Asian crowdfunding.

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Global body reviews “an infant industry growing fast”

By Crowdfund Vibe Staff Writers

Crowdfunding can stimulate economic recovery by channelling capital to small and medium-sized enterprises (SMEs) according to a report issued by the Research Department of the International Organization of Securities Commissions (IOSCO).Cover IOSCO report

Their report identifies benefits and risks, particularly in the area of investor protection. It advises that governments around the world will have to harmonise their regulatory approaches to an increasingly global industry. In doing that governments and regulators will need to strike a balance between encouraging crowdfunding and mitigating the risks associated with its growth.

The report reviews both peer-to-peer lending (crowd-lending) and equity crowdfunding (crowdinvesting), and provides key insights on the main implications for users.  This is the first publication of its kind that ties together a global overview of the industry together with a comprehensive profile of its regulatory landscape in 13 IOSCO member-countries. (This includes the Pacific Rim countries of Australia, Japan, New Zealand, South Korea, Ecuador, Canada & the USA.)

While crowdfunding markets are small, they are growing fast. Driven by annual growth of 90% in peer-to-peer lending, the global crowdfunding market has doubled year on year for the last five years to a estimated $6.4 billion in 2013, according to IOSCO. The worldwide equity crowdfunding market is more modest in size and has grown at a slower pace. While the current market size is too small to cause systemic risk, IOSCO consider it has the potential to grow to a sizeable market in a short period of time.

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