ADVANTAGES OF CROWDFUNDING AS AN ALTERNATIVE SOURCE OF FINANCING OF SMALL AND MEDIUM-SIZED ENTERPRISES

Abstract

The lack of funding, and limited access to it are the basic problems faced by small and medium-sized enterprises (SMEs). Given the great role and importance of SMEs in every national economy, any progress in solving these problems in terms of creating and finding alternative sources of funding should attract great attention in both professional and scientific and the wider socio-political communities.

Crowdfunding is an innovative and relatively new concept that connects entrepreneurs and investors through the Internet. This method allows the entrepreneurs to collect funds through the Internet by "open invitation" to finance their projects/ventures and thus raise the necessary funds by relatively small contributions of a relatively large number of investors. As such, crowdfunding is a fast-growing model increasingly debated of in academic circles and the European institutions.

This paper will consider crowdfunding as an alternative means of financing SMEs and try to give different aspects of crowdfunding - and explain how it works, what are the advantages of using it for SMEs and thus expand the knowledge on the topic.