Page 53 - Business_Studies_F5

Student's Book Form Five

enterprises to make decisions about the that needs to be financed. Furthermore, the
initiators and platforms. There are different act of sensitising investors can be regarded
ways for an enterprise to be engaged in as a way of promoting the business and
crowd funding such as debt, equity, reward, increases the possibility for investors to
and donation. become new or loyal customers. Some
FOR ONLINE READING ONLY
Debt crowd funding involves raising funds constraints regarding crowd funding include
from investors who should be repaid the raising money can at times be costly in
invested money, with interest. An example terms of invested time. Again, it is not quite
is microfinance where very small sums certain whether the funds to be raised may
of funds are lent to poor clients at certain meet the amount targeted by the business
interest rate guaranteed by other fellow enterprise. Moreover, under crowd funding,
clients. business enterprises are required to share
their business ideas with investors. By so
Equity crowd funding involves collecting doing there is a risk for their unprotected
money from people and organisations in ideas being stolen by others. As a result,
exchange for shares or certain levels of the failure of an enterprise whose activities
ownership in a business enterprise. Equity or ideas were financed by crowd funding
crowd funding is successful if the value of may damage the reputation of the business
investment goes up rather than when value and investors.
goes down.

Reward crowd funding involves raising Grants
funds from people and organisations in A grant is financial support from either the
exchange for non-financial benefits such government or private organisations that
as free gifts. Free gifts or rewards can be is given to enhance business activities.
recognition, tickets to a concert or event, Grants may be offered by both local and
regular or free media publicity or coverage. international organisations to support
specific projects or initiatives. The
Donations crowd funding involves raising government or private organisations can
funds from people and organisations in provide grants in form of money or materials
exchange for social or charitable activities. to start-ups and existing businesses as well.
Returns to donations are considered For a business to access a grant, usually
intangible but donors have personal or there are strict application requirements to
social motivation for financing the business be fulfilled by the beneficiaries. Moreover,
expecting nothing back or refund.
the grant providers stipulate spending
Crowd funding is a quick and cheap way conditions which the beneficiaries have
of raising capital, for example, donation to follow in order to ensure that the money
and reward crowdfunding. It also enables or materials provided are fully utilised for
business enterprises to communicate with the intended purpose.
people and organisations about the activity

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Business Studies FORM 5.indd 44 30/06/2024 19:02:32