Crowdfunding a best alternative to Banks?

The crowd funding begins to touch the world of Start -Up, as an alternative to banks and business funders. Crowd funding is in between barter and solidarity loan capitalism of yesteryear, crowd funding often have much fun and attractions but it is sometimes risky. Many projects that have or will emerge in part through crowd funding (literally financing by the crowd), also called crowd funding. The phenomenon is not new: In 1958, John Cassavetes was able to finance his first film “Shadows “with a call for funds to public through radio. This phenomenon is becoming increasingly important. And now there are more than thirty sites are assisting general public as the crowd funding investors. Few of them are Ulule , MyMajorCompany , Sandawe , KissKissBankBank , Loan Union HelloMerci , Babyloan SmartAngels , Wiseed , Anaxago etc.

 The crowd funding market raised already worth $ 2.5 billion in the United States alone. There are three types of crowd funding. First, there is the gift against gift, nothing but a barter system. Then there is the system of loans or micro-credit. Some are paid, others do not, and that is like solidarity loan. Finally there is the financing of a business project in exchange for shares. The gift system against donation is very common in the world of arts. Projects may be small or substantial. Micro-credit is also very concerned and developed projects in US and abroad, mostly in trade, agriculture etc. According to Ricordeau Vincent, one of the founders of Kiss Kiss BankBank , "the motivation is to give birth to a project without any other return on investment a return emotional . People seek social link, a contact based on sharing, empathy, and trust. It is completely selfless unlike a financial return on investment. "

 For some companies, it is an alternative to banks and business lenders. This is particularly the case of start-ups, with little equity in start-up phase. However, crowd funding sites do not replace the banks. They do not lend money and they do not handle client funds. They are in an intermediate step of advice and not through management. The client chooses his investment and invests himself live in society. The sites just forgive a direct link between investors and entrepreneurs. This is the online community that validates whether the project should be born or not. This is not a window that decides to grant money or not. The risk is real and greater than the stock markets which has the advantage of being more liquid and especially give a real-time indication of the value of its assets.

Capital loss may be total and the second risk is the liquidity, This is an investment you can make for an unlimited period than what you anticipated. So do not invest money that you think you need three to five years. But there is another side: a significant potential gain, as we arrive shortly after the creation of the company. And it's worth it to invest in companies earlier. Here the risk and the reward are fairly standard. Regarding the gift donation against the financial risk is limited because the average financial contribution of users is around 50 Euros. If successful, the trust is garnered monumental. The question of the output is still crucial because all companies are not intended to go on an exchange.

If ramping up its activity, the company may be acquired by a competitor where leaders may choose to redeem the shares of the minority. And the price and the valuation is a matter of negotiation between the parties. Often these issues are anticipated in the shareholders' agreements. Early outputs can also be provided, but the recommended investment period is about 3 to 5 years, to let the company time to create value. In the end, crowd funding today fills a void in the financial needs. It allows artists to project promoters, merchants to support their project to start. Internet also allows them to reach a larger number of donors, lenders or investors, but is by no means a guarantee of success. Crowd funding is still in its early stage. Hence the Crowd funding is a social network linking young companies seeking skills, people willing to integrate a project as a partner or as freelancer and helping each other by joining hands together.

Know more about Crowd funding!

Crowd funding is a technical project finance business start using the internet as a channel of linkage between project managers and those wishing to invest in these projects. Of course it is an ancient practice but currently it is the subject of a wide popularity due to its simplicity of operation and the difficulties faced by some designers to find financing for their small projects.

 How it works?

The investor who wants to invest some money in a good project at one end and the holder of a project who starts business but does not have the funds needed to start his business and does not want to call the bank credit at the other end. The both meet on the Internet via a dedicated platform. The projects are presented by their holders and investors choose to fund one that they like to live up to what they want to invest. The simple operation of this form of financing also has the advantage of transparency for the investor. Both knows what is funds and by which choice and by its values. Crowd funding is associated with all kinds of projects. Generally, cultural, digital projects, social, environmental, innovative are the few worth mention.

 Three types of inputs are available to investors:

The first type of investment is a small gift or donation that is given to the project but the remuneration of the investor has no financial consideration. The second type of investment is a participation in the equity of the company created. The remuneration of the investor is then by dividends or the gain realized on the sale of securities. The third type of a investment is a loan. Pouring loan interest may only be offered by credit institutions authorized by the Banks. Fundraising to make lending is strictly prohibited. Only collecting interest free loans is open to individuals. The money invested can be few dollars to several hundred. Banking and tax regulations is a source of significant stress for structures offering financing platforms that obey different rules : The detailed identification of the investor ( proof of identity and residence) is needed to controls against money laundering , anti- terrorism, etc.

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Crowdfunding

The crowdfunding is a practice that is becoming increasingly important in all sectors. The "Crowdfunding" means "crowd funding" is to highlight key projects on an online platform and collect donations from users to realize the project. To date, there are several online platforms that do crowdfunding. This device allows individuals to find projects that match their taste, nearby or across the world, in all areas that are, and contribute directly to their construction, thanks to their savings in the form of committed gift, loan, or capital. The problem is that more and more participatory sites come onto the market, and each has a different mode of operation. According to the funding model on which they are based, the consequences for individual investors are not the same.

Mymajorcompany is a crowdfunding online in 2007 platform provides an opportunity for people who want to fund a project to place their gifts on a project of an artistic nature of a fixed term of six months. The project manager makes his case online retailer counterparties repay it intends to users. At the end of the operation, if the project has raised enough money to see the date, individual donors perceive generally a share of profits from the commercialization of the project, "if it generates." This model then gives a close to a "micro business angel" to users who invest in the sustainability of the project status. Other platforms offer gifts to reward individuals who contribute to the financing of projects. If the amount set is reached, the project is funded and users receive a symbolic reward for their participation. The counterparty may be a book autographed a copy of the disc, a card or just a letter / email of thanks. The business model here is closer to the hardcore gift. It keeps the character "philanthropist" to donate to help and not to return on investment. The most popular sites are KissKissBankBank, Babeldoor are the few crowdfunding platforms works by financing through a loan. The user advances some funds to the project of their choice. Once the project is completed, the user is reimbursed up to his contribution. In this area, the most famous platform Babyloan.org lends without interest.

 There is currently no legislation governing trade and financial flows on crowdfunding platforms. The reason is that the amounts are not large enough to be controlled by law. However, crowdfunding involves several "soft" areas. In the case of a system based on micro-credit model, the platform must have approval by Authority, which is rarely the case. Then, any financial contribution by an individual to a project gives it the status of "associate" because its contribution is legally speaking a capital contribution to the project, which is never the case. Crowdfunding is basically a system that works through donations. The payments are considered donations, must be reported to the tax and to be taxed. The majority of individuals skip this step. If these sites are regularly used to give large sums of money, it is likely that the IRS is involved.

The Circular Economy

The Institute of circular economy was officially launched in Paris on February 6. The main objective of the principle of circular economy is interesting because it is based on the idea that "The waste of one person is another resources of others. This model, which involves a long-term vision, as well as the economy of resource management and environment, seems like a good track to emerge from the economic, social and environmental crisis in which we are stuck now. The Institute of circular economy is an alternative vision of the economy. The Institute is composed of national and local policy-makers, entrepreneurs, academics from different backgrounds and association leaders. The aim of this structure is to promote an alternative vision of the economy. It is chaired by François-Michel Lambert.

He starts from the premise that the linear economic system that is "extract, produce, consume and throw is out of breath. It is now widely recognized that economic model based on a strong dependence on raw materials are becoming scarce and more difficult to extract in one hand, and the development of consumer non-durables - which obsolescence is sometimes planned - on the other hand, impacts our environment in the broadest sense. This model impact the environment and the people who migrate are sometimes under heavy pollution. The circular economy is pragmatic, because the concepts of recycling and regeneration and alter-growth are the foundation of circular economy.

At the ideological level, extensive consumption, reduced product life cycles and the relocation of production are central to the debate. Usage and consumption are also redesigned, including the concept of ownership. The idea is not to share or collectives of the properties but to think in terms of "a well-differentiated uses." Example is taken from the washing machine: the advantage of being owned by such a machine is zero, but its usefulness is high. The circular economy is unifying as it aims to "unite and involve all stakeholders and experts in a collaborative approach by pooling resources to conduct collective thinking."

U.S. monetary policy brings down the Indian rupee?

The Indian currency has again reached a record low on Tuesday. Like other developing countries, it suffers including expectations of investors who expect a shift from the Fed. The Indian giant shuddered. With the collapse of its currency, returns the specter of a crisis it had known early in 1991. Prime Minister Manmohan Singh had himself risen, claiming that this new crisis was not of the same order. Moreover, the crisis of the rupee displays India is experiencing a slowdown - albeit relative - its growth. In this context, the question of advancing the general elections before the month of May 2014 was again discussed among the members of the Indian political class. How to explain this monetary crisis going to translate into political crisis? The Indian currency Monday reached its lowest level. On Tuesday, the dollar traded as against Rs 64.11 earlier in the day. The day before, she had gone through the floor dropping to 63.22 rupees to the dollar. More broadly, in two years, the country's currency has lost more than 40% of its value since July 2013. Main reasons given by most analysts: the fear of expected monetary tightening of U.S.

 The impact of a possible end of the buyback of bonds by the Fed is already being felt in the last two months. Capital hesitates between the United States and emerging countries. When the shift in U.S. monetary policy was announced, the capital flows are rerouted to the dollar. The Indian stock market actually costs, “there is still a month; the SENSEX index exceeded 20,000 points," points out the researcher. He thus lost 7% in three days, falling below 18,000 points before rising slightly at the close on Tuesday. In India the deficit of current account is the source of all problems. The deficit amounted to about 4.5 % of gross domestic product, according to a note from the Bureau of Economic Analysis of BNP Paribas. To this must be added a context of relatively slow growth. For the 2012-2013 year, India's central bank has lowered its growth estimate from 5.8% to 5.5%. Well below the 9 % increase in GDP experienced by the country during the previous years.


 In addition, “even in the field of foreign direct investment, we feel a hesitation. Whenever the election is tight, investors may worry about a shift," says economist Center Future Studies and International Information. Faced with this situation, the Reserve Bank of India (RBI) would have little leeway. This is “very embarrassed because political control of the money supply can have a negative impact on growth and investment. It is therefore obliged to act in short strokes. The RBI has, for example tried to halt the decline of the rupee e.g. preventing imports of gold, limiting to $ 75,000 per year instead of 200,000 the amount that can leave the Indians in the country but also in controlling purchases estates abroad. India is not alone in feeling the effects of investor expectations about the U.S. monetary policy. Other emerging market currencies were also affected, such as the Brazil and Indonesia. Finally, more broadly, the crisis itself could amplify these phenomena. India has no role in driving the region since this has the effect of weakening the economy, there is however a risk of indirect contagion in other emerging countries, especially China.