Crowdfunding is a revolutionary and innovative online funding solution that provides funding to the people who require them for medical, educational, cultural or any other purpose.
The concept of crowdfunding money has been present in the Indian conscience for a long time. But Online Crowdfunding has been popularised by the US to the world. Online crowdfunding is a new way of raising funds, by using internet or social networking sites and some online crowdfunding platforms. Crowdfunding India says that although the concept has been pioneered by US, India has emerged as a successful arena for crowdfunding. But there are some differences in various aspects of crowdfunding, between India and US. In this article, Crowdfunding India charts the main differences between Crowdfunding in India and US.
Difference in the models
Crowdfunding has three different models- Donation, Investment and Equity-based. Equity based crowdfunding is illegal in India. Crowdfunding India says that the model which is most popular in India is the donation-based one, whereas in the US there are no such legal restrictions.
Difference in the laws
Crowdfunding India points out that in US, there are a number of rules and regulations for crowdfunding. People can only donate 5 percent of their annual income. Whereas in India there are not many regulatory measures in Crowdfunding, so people can donate whichever and however the way they can.
Challenges in India
Low trust levels of doing the things online is also a challenge. Crowdfunding India opines that India’s e-commerce space is not completely developed unlike US. People need to access the internet, who can afford to, at least.
As long as the crowdfunding platforms are not making any payback promises to the donors, they are theoretically safe. Also, complete transparency and honesty should be maintained to gain the donors’ trust.
To encourage larger participation, these crowdfunding platforms must find an offline mode of payment, because most people are not habituated to online payment.
Difference in approach
India has a larger population than the US making it more suitable for crowdfunding. Also, Crowdfunding India says that India has a large number of Non-Governmental Organisations who carry out various charitable works without any assistance from the government. Therefore Crowdfunding is the only approach to them. Indian population loves to view Crowdfunding as a mean of donation and charity, whereas those in US are more kin to investments and returns in equity-based models.
There is no doubt that crowdfunding is slowly replacing other funding methods and more and more people are looking upon it as a serious way of raising funds for startups, treatments or charity. The US agencies have started implementing laws for this to function. There are serious concerns, which make it necessary to bring this method under the laws of the land. India will soon bring up the laws required to bring the situation under control because an efficient crowdfunding system would catalyse the success of crowdfunding as a perfect alternative to taking loans, etc. You can visit the Crowdfunding India page to know more about how crowdfunding works.