A new crowdfunding model to protect investors interests in Russia

Abstract

The concept of crowdfunding has been actively developing over the past ten years, transforming into an established form of alternative finance for startups and small and medium enterprises. As a classical two-side market, crowdfunding provides interaction between entrepreneurs and investors through an Internet platform. In Russia, this type of funding is just emerging but has already faced a decrease in investment activity due to fund loses on these platforms. The purpose of this article is to create a new crowdfunding model which refers to the classical approach of its formation and offers opportunities for investors interests protection in Russia, increasing their professionalism and, as a result, the image of Russian alternative finance market. The methodological basis of the work is a systematic analysis of economic literature, international and Russian legal framework, and statistical data. The study identifies and analyzes perspective crowdfunding models and legislative features of investors protection on foreign and Russian alternative finance markets. On this basis, the authors build a model adapted to the Russian market, which includes in the crowdfunding process the investors communities — organizations «filters» whose activities are connected with investors registering and checking companies using deep due diligence. The implementation of the model at the state level will reduce funds losses caused by the lack of financial literacy among investors and effective selecting companies system among platforms. The findings can become the basis for legal acts, strategic concepts and governing regulations of investment activity.

References

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