As compared to the foreign markets including the US, the UK and China, crowd-funding is in a budding stage in India. But due to the excessive usage of social media platforms, this technique to gathering funds have gained importance in India too to back up creative campaigns and help entrepreneurs to shape up their ideas.
Crowd-funding was started in India, last year by Catapooolt by Satish Kataria, who has years of experience of strategic management. The platform was initially launched with the aim to support creative projects and would also help entrepreneurs in engaging with the communities to raise funds and resources. Catapooolt leverage the power of crowd funding in India into unique projects categories which include politics, sports, start-ups and other creative campaigns.
Crowd Funding Explained in Simple Terms
The crowd-funding technique typically involves young entrepreneurs and small groups of people, who raise funds from the market for their ventures, using different online platforms. This online platform involves individuals and organizations too. Crowd-funding platforms are also seen to have used for launching products and services that commits financial returns to the contributors of the fund.
But proper guidelines should be there to ensure that crowd-funding becomes the most amazing option for the entrepreneurs and no potential risk generate from that. Along with SEBI, International Organization of Securities Commission (IOSCO), an international body for market regulators is looking after the regulatory checks on crowd-funding in order to avoid the systematic risk that might arise from it.
In the last few years, there have been instances of money lapse or money being withdrawn by the contributors due to some unknown reasons. In order to solve such issues, SEBI is continuously putting endeavours to solve the errors by keeping in touch with the regulators. According to the SEBI spokesperson, they are quite serious about the project and are serious looking forward to come up with solutions to start crowd-funding effectively in the country.
As per the spokesperson of SEBI, all NRI would be able to invest in the crowd funding in India along with the KYC (Know Your Customers) forms. SEBI has outlined the complete guidelines for NRIs to invest in domestic markets. Even RBI too came out with guidelines for KYC requirements of SEBI for all the foreign portfolio investment.
SEBI believes with the start of the crowd funding in India in full fledge, institutional bidders and private equity firms will gain better opportunities for investment which would further nurture the ideas of the entrepreneurs and other creative projects.