Crowdfunding is globally a $16-billion industry and as per estimates, in 2016 with a total investment volume of $34 billion, it is likely to overtake the amount of equity funding from venture capitalists to startups which is $30 billion.
Even as equity crowdfunding is one of the fastest growing models of crowdfunding globally with a total volume of $2.5 billion, it is yet to take off in India where regulations are still waiting to open up.
“With Title III of Jumpstart, our Business Startups Act coming through — securities-based crowdfunding is now rapidly defining the new contours of crowdfunding in USA. Whereas in India, it’s almost two years that Sebi issued a white paper on securities-based crowdfunding but has not taken any action beyond that,” said Satish Kataria, CEO at crowdfunding platform Catapooolt. “We are hoping that after the current acceptance of the P2P model, Indian regulators may also clarify their stand on other crowdfunding models.”
At present, all crowdfunding platforms are projecting themselves as social impact projects — connecting lenders and those who need funds rather than funding platforms. “It will be tough for such ventures to scale up if regulations don’t change,” said Vikram Gupta, managing partner, IvyCap Ventures.
With regulation not coming through, most crowdfunding companies in India restrict themselves to finding backers for creative projects such as those in fashion, independent films, music, comic, publishing and photography.
“We try to limit it to largely creative projects whereas our global counterparts help fund a wider spectrum of entities such as mobile apps, manufacturing or ecommerce companies,” said Varun Seth, CEO of Mumbai-based Ketto which has helped disburse Rs 20 crore across 2,000 projects.
Ketto, which last year received $7,00,000 from Calcutta Angels and ah! Ventures besides other investors, last week launched Ketto 3.0, adding new features to the platform such as social sharing, providing updates on funding in order to improve user experience. Experts also believe the level of innovation in terms of unique ideas is low in India so as to open up as equity-based startup-funding platforms in a big way.
“In the US, platforms like Kickstarter get on an average 20 new technology innovations every day listed on it. Such products are still rare to find coming from India as most Indian entrepreneurs are still trying to ape international models instead of working on original ideas and products,” said Kataria of Catapooolt.
Source: The Economic Times,
