How can we define crowdfunding? It can be deﬁned as an open call— mostly through the Internet—for the provision of ﬁnancial resources by a group of individuals instead of professional parties, either in form of donations, in exchange for a future product or in exchange for some form of reward (Belleﬂamme, Lambert, & Schwienbacher, 2013).
Through the net, crowdfunding eliminated the need of a classic intermediation characterized by a bank or a stock market and introduced a new way of intermediation between investors and entrepreneurs (Belleﬂamme, Lambert, & Schwienbacher, 2013).
Crowdfunding platforms intermediate between individuals, start-ups or companies on the one hand, …show more content…
The formation of international platform such as Indiegogo, RocketHub and Kickstarter created a base big enough to aggregate a wide range of project and a high number of investors in a single platform (Freedman & Nutting, 2015). The diffusion of these platforms contributed to the introduction of a standard process and a web interface easily recognizable by investors and seeker of funds that are now able to better understand the instrument and invest in a clearer way (Freedman & Nutting, 2015).
1.2 The rise of crowdfunding: a macroeconomic analysis
As we can see from the figure 2, after 2008, the number of active platforms worldwide increased rapidly, this allowed the creation of a common market for investors and entrepreneurs. The correlation between number of active platforms and fund raised is easily visible analysing the performance of the two variables proposed in the figures below (Figures 2 and 3).
Figure 2 - Number of Active Crowdfunding Platforms (All …show more content…
(2013), Mollick (2014)
For the purpose of this thesis is interesting to have a closer look to the equity crowdfunding models developed in Europe. A wide variety of funding mechanisms have evolved mainly to accommodate the different regulatory requirements in the Member States. In the last final report on crowdfunding of the European commission (Crowdfunding innovative ventures in Europe), we can find five of the most used equity based model in Europe :
• The profit/revenue sharing model entitles the investor to a predefined share of the profit or revenue of the start-up or project funded during a specific period. This obligation is purely contractual and no real ownership or equity of the company is obtained;
• In the nominee structure, a third party holds the legal titles of the equity on behalf of the crowdfunding investor who is the actual or beneficial owner. This means that nominee is the legal shareholder in the relevant company’s shareholder register, but he hold those shares on behalf of the various individuals who had invested in the company through the crowdfunding platform (the nominee). The effect of this structure is that while the nominee holds the shares, the full economic interest in them are passed through to the underlying investors (Lynn, 2013). The nominee acts as the sole interface of all the crowdfunding investors towards