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Cost of Crowdfunding as a Source of Capital for the Small Company

Author

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  • Anna Motylska - Kuzma

    (Wroclaw School of Banking)

Abstract

The main object of this paper is to analyse advantages and disadvantages of capital deriving from crowdfunding compared to other sources of capital used in a company, especially in the SMEs. As the main factor used for comparison I take the cost of capital, because it is crucial in the decision process of choosing the source of financing. The explored data is mainly obtained from the Polish economy, but I use the European and World context, too. To contrast the capital from crowdfunding I have chosen debt funds (i.e. bank loans, commercial papers and leasing or hire-purchase) and equity funds (i.e. issue of shares, venture capital or private equity funds, business angels) as the more traditional sources used to finance innovative projects in the company. Although the conventional sources of capital could be cheaper or easier to raise, they have many limitation to use, especially for SMEs and earlystage enterprises. Additionally, they are not able to ensure and provide demand for the new ideas offered by firms. This fact definitely changes the cost of used capital, especially when it should finance an innovative project

Suggested Citation

  • Anna Motylska - Kuzma, 2015. "Cost of Crowdfunding as a Source of Capital for the Small Company," Proceedings of International Academic Conferences 2705114, International Institute of Social and Economic Sciences.
    • Handle: RePEc:sek:iacpro:2705114
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    File URL: https://iises.net/proceedings/18th-international-academic-conference-london/table-of-content/detail?cid=27&iid=082&rid=5114
    File Function: First version, 2015
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    Cited by:

    1. Zbigniew Kurylek, 2020. "ICO Tokens as an Alternative Financial Instrument: A Risk Measurement," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 512-530.

    More about this item

    Keywords

    crowdfunding; cost of capital; innovative project; SME; financial strategy;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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