Wednesday
May 11
2016

Tight Government Regulation, Paucity of Innovation Limiting Crowdfunding Startups in India

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.

Source: The Economic Times (link opens in a new window)

Categories
Entrepreneurship
Tags
crowdfunding, entrepreneurship, regulations, startup