Crowdfunding and start-ups: an Indian context

Abstract

Start-ups play an important role in increasing economic growth, whether as regards rising domestic production or leading to reducing unemployment. Obtaining funds for a start-up project is one of the biggest challenges that entrepreneurs might face when starting their own business. They initially pursued support from research grants, or banks, but most of the time they were unable to provide the banks with adequate guarantees. That is when it comes to the idea of setting up a special institution to provide finance to start a new business with new idea. The principle of microfinance dates back to the 1970s to provide credit to poor people who could not get money through normal channels of finance. Crowdfunding is a new trend of getting resources for the new projects, enabling entrepreneurs to take advantage of the internet to raise small amounts of money for their small business from a large number of people. Based on secondary data, the study addresses the following research questions: 1) What is crowdfunding? 2) In which context/s is it used in India? 3) How does crowdfunding help start-ups in India?