Over the last years a new way of financing entrepreneurship is increasingly in use. Crowdfunding, which has its origin in crowdsourcing, is the collection of finance by people – the “crowd” – who network and pool their money together in order to fund an initiative which is initiated by other people or organizations.
Thus crowdfunding is also used as an instrument of early-stage financing to provide risk capital for the establishment of new companies or for the financing of innovation projects in small and medium-sized enterprises (SMEs).
By operating through the internet so called crowdfunding platforms provide contracts, offer consultation services and support the implementation of technology and standardized processes.
In Austria it was made known by Heini Staudinger. Because hedid no longer getacreditfromhis bank the shoe producer (GEA) from Lower Austria asked friends, family members and business partners to lend him money at an annual interest rate of four percent. Since 1999 Staudinger had received financial contribution of 2.979 million Euros. He was then sued by the Austrian Financial Market Authority (FMA) because loans may only be a matter of banks.
Crowdfunding is also a European matter. Currently, the European Commission discusses how to deal with crowdfunding platforms in the future.
Meanwhile, there are several crowdfunding platforms with different orientations in Austria that have financed approximately 1.5 million Euros.
In 2011, around 450 crowdfunding platforms have been counted worldwide having placed about $ 1.4 billion. Last year over 550 online marketplaces financed nearly two billion dollars.
