Advantages and disadvantages of crowdfunding

As a new investment and financing model, crowdfunding has four significant advantages. This paper analyzes these four advantages in combination with the "paper" wallet ONEDAY project.

(1) low threshold

Judging from the development of the project, compared with other financing channels, crowdfunding basically has no or low requirements. As long as you have ideas and creative projects, you can raise funds through crowdfunding.

(2) diversification

There are many directions for crowdfunding. The items on domestic crowdfunding websites include design, technology, music, film and television, food, comics, publishing, games, photography and so on.

(3) Grassroots nature

The supporters of the project are usually ordinary people, not professional companies, enterprises or venture capitalists.

(4) Innovation

Most of the crowdfunding projects initiated by crowdfunding participants are very dynamic and innovative. The essence of crowdfunding is that the project is recognized and supported by everyone, so that the needed funds can be raised from the supporters. In order to get more people's support, projects usually must be innovative, dynamic and executable.

2. Shortcomings of crowdfunding model

Raising funds through the crowdfunding platform, whether it is the supporters of the project or the sponsors of the project, the crowdfunding platform provides them with a lower entry threshold, which greatly reduces the difficulty and cost of investment and financing. But compared with the advantages of crowdfunding, the disadvantages of crowdfunding are also very obvious.

First of all, due to the restriction of the relevant legal environment, all the projects on the crowdfunding website cannot be returned in the form of equity, bonds, dividends or interest, and the project sponsors cannot promise any economic benefits to their supporters. It must be returned in kind, service or media content, otherwise it may involve illegal fund-raising and even constitute a crime.

In addition, there are many crowdfunding models, such as reward crowdfunding, fund-raising crowdfunding, equity crowdfunding, loan crowdfunding, etc. There are many types of products under each type. However, it is precisely because of these business contents that there is no clear definition and specification in the crowdfunding field, and most of its products are non-standard products, which can not achieve large-scale expansion like the standardized products of P2P business funds, and the pricing mechanism is difficult to be clear and clear, which also hinders the expansion and development of crowdfunding model.

No matter the advantages or disadvantages, it is still unknown when we can embark on a road of crowdfunding with China's national conditions and China's characteristics. But what is certain is that we have walked silently on this road, and this road will get wider and wider.