In a gesture that can be interpreted as the government’s acceptance and encouragement, the
As per the norms, there is a clear cap on how much capital firms can raise for their ventures as crowdfunding and the platforms provided would be those registered with SEBI. Companies can raise up to Rs 10 crore through this route. SEBI will issue final set of norms soon, but indications are that certain category of operators would not be accepted as crowdfunding donors.
Since last few years, Crowdfunding has turned into a very enticing proposition in India, which has many innovative minds across the strata – starting from agriculture to the technology sector. Despite the criticism Indian education system has been facing over the years, it is fascinating to watch students participate in science contests and come up with some astonishing ideas. Some even have the business and production aspects worked out and can dumbfound the greatest minds with their attention to end use of the innovation they have made while exercising care for the environment, being totally conscious of what their product can do to save the earth from further exploitation.
What comes further is a cliché, but an observation nonetheless. Just as the high percentage of women who enter the corporate sector with gung-ho and then mysteriously taper down in percentage when it comes to occupying the influential positions, the scenario is the same with students too. Supposing a sprightly student who has exhibited signs of turning into a promising talent in his/her chosen field, somehow dissolves into the mainstream and disappears forever into the boardrooms. The talent seen at a young age, simply melts into nothing since companies want mindless bodies who fit into their vision and mission statements. Any deviation from the regular path would be considered ‘difficult.’
Hence, India stands to lose a lot of talented minds who have the innovative streak in them, but don’t have the necessary economic backing to turn their innovation into something that can make the world a better place.
In such a scenario, crowdfunding becomes an endearing departure from the beaten route. Crowdfunding, if it takes off in India as much as it has done elsewhere, is going to be one BIG DEAL. Why? Because it is not about business alone but about a new concept.
But if you look at the hype created by the media about crowdfunding, you would think soon the equations between concepts, corporates and innovative minds is going to change. Right? Well, yes and no. As much as crowdfunding is an emerging concept in India, it is also ridden with a lot of loopholes that need to be fixed before it becomes a norm.
There are about a half a dozen of crowdfunding platforms in the country. Crowdsourcing.org has been predicting some big numbers in terms of money coalescing into funds since the beginning of this decade. But the source and operation of these funds is diverse and unclear. This is what SEBI plans to fix with its intervention.
For instance, some funds are about rotation. Investors or donors who come to fund a few ‘new ideas’ would like return on investment (ROI) in a particular time frame and go on to support newer ideas. There is another category that would like to be a total donation or some sort of a reward for a big concept to take off, without bothering about the commercial angle of this concept.
Then there are micro-financing ventures about handing out small loans, mostly free from interest, but certainly with an eye on getting the money back into the funder’s kitty. Milaap is one such example.
There are those equity-based fundings for a start-up where the donors take a share of equity in a project. If you set the emerging trend aside and take a cursory look at the way Indian psyche operates, it is a recipient of both philosophical and modern methods of donating. India is home to millions of NGOs which work on various causes.
Religious institutions run on donations. Festivals are organised en masse only through donations and around these events, people often donate very liberally. So, that’s one perspective of crowdfunding that already has a sanction of the society and exists in the very fabric of it. Elections are another thing altogether when people donate and receive money in huge amounts.
With completely non-existent benchmarks to arrive at the success potential of an idea and impersonal interaction coupled with no talks at the government level yet, don’t make crowdfunding as attractive as it is made out to be.
But that’s not the end of the concept. Emerging India will soon learn to change the definition of crowdfunding to suit its established pattern, and hopefully march ahead, holding promises for the young minds.