What is Crowd-Funding?
Crowd-funding is a method of raising capital through collective effort of friends, family, customers and individual investors. This approach taps into the collective efforts of large pool of individuals, primarily online, via Social Media and Crowd-funding platforms. Apart from raising capital, Crowd-funding is also a way to create awareness among the masses and seek support for a project from the people around. Simply put, it is a means of funding that allows individuals to make their ideas a reality with the power of “Crowd”.
Crowd-funding In India
“Coming together is the beginning”, a tagline that rightly applies to the emerging Crowd-funding industry in India. The platform has introduced new ways to raise funds for start-ups, organizations in the social sector, real estate and so on. Crowd-funding platforms today are proliferating. A plethora of models are being tried and tested by different players in this sector. At present, we boast of having three types of Crowd funding in India: Donation and Reward based Model, Lending Model and Equity Based Model. Additionally, Reward-based crowd-funding, Pre-financing of products, art, music, films, software or scientific research are also in vogue.
The global crowd-funding industry generated about 34.4billionin2015[cite:1195].[citesâtart]InIndia,Transactionalvalueinthe”Crowdâfunding”segmentamountstoUS6m in 2017. It is expected to show an annual growth rate (CAGR 2017-2021) of 24.8% resulting in a total amount of US16mby2021[cite:1195].[citesâtart]TheaveragefundingpercampaigninthissegmentamountstoUS171.60 in 2017. Also the number of Funding campaigns is expected to grow to 60301 by 2021. In addition to this, according to Bloomberg, India is the second largest internet market and has more than 342 million mobile users. By virtues of this proliferation, a variety of online payment options have made way into the market which make transactions easier. Not only this, a population of 1.2 Billion, comprising a steadily rising middle class is a boon to the power of capital formation which is necessary for crowd-funding. Also as per the new Companies Act, all firms are mandated to spend at-least 2% of their earnings on Corporate Social Responsibility.
Hiring Scenario in 2017:
Lately, the Crowd-funding industry has witnessed a massive growth globally. For 2015, the estimated fundraising volume through crowd-funding globally was $34 billion as per a Massolution Report. E-commerce is maturing as an industry with an improved understanding of utilization of costs and resources. Interestingly, crowd-funding is also a type of an E-commerce platform. With the recent ‘Demonetisation’ scheme paving its way in the Indian economy, more and more retailers are deflecting into this sector, giving the platform of Crowdsourcing a much needed jump. Also most of the E-commerce firms are actively adopting cashless modes of payments. A recent survey by Wisdom Jobs with a sample size of around 3000 employees stated that there could be a 10-15% rise in hiring process by virtue of the dynamic growth that the industry has seen.
How Crowd-funding can create Job Opportunities in India.
As stated already, crowd-funding industry is a subset of the E-commerce. And the latter is witnessing an unprecedented boom in India. It is estimated that the E-commerce sector is likely to generate an estimated 75000 to 100000 jobs (20% of the current workforce engaged in the industry in 2017). Also it is projected that by 2025, this sector will generate around 12 million jobs in India. Crowd-funding gives an opportunity to those who possess entrepreneurial skills. It also comes as a boon to people who have a decent knowledge in marketing and who have a knack for creativity. The social sector and creative space are benefited most through such a platform. It is a blessing for those who do not aspire to be fully integrated in the social sector but would like to indirectly associate with it. Such individuals are able to experience the functioning of both the corporate as well as the social space. Not only this, candidates who have completed their post graduate programs in Marketing can also move to this industry where they can help in generating business and thereby eventually move to Strategic areas. Crowd funding also serves as a strong propellant towards making and keeping contacts- a plus for people seeking to network. Individuals possessing a creative nerve can help in building creative campaigns, which in turn can help raise funds. In conclusion, Crowd-funding is the next Big Thing in the Indian market. This fortunately comes at a time when the country is moving toward the age of digitization. It is hassle free and a very strong source of encouragement to the dynamic entrepreneurial minds of a growing India.
Birth of Ketto:
Gauging a significant influence of Social Media and internet on a fast growing young population, Actor Kunal Kapoor and myself founded Ketto on 15th August 2012. The idea behind Ketto is very simple- Connect people who have money with those who need money. We understood the challenges that sprout when raising Funds for any cause, for it is not only difficult, but also time consuming. The founding team was later joined by Zaheer Adenwala. Ketto is a Mumbai based crowd-funding platform focusing on Social, Creative and Personal domains. Although our objective at the very beginning was to work in the space of social development by assisting NGOs to raise funds in a far more transparent, engaging and cost effective manner; today, Ketto is one of the most robust and dynamic technology platform that could be used by NGOS to not only raise funds but also maintain donor relations in a far more effective manner.
Author Information:
Varun Sheth “He is the Founder and CEO of Asia’s largest crowd funding website “Ketto”. He has a background in finance and studied at Narsee Monjee. Having always been interested in the financial sector, he went on to do a couple of financial programs that included chartered financial analyst (CFA) and financial risk management (FRM).”
