Crowd-funding is a financial innovation that has seen a popular surge in recent years and affects a number of key global initiatives outlined by IOSCO and the G20. These include the diversification and broadening of securities markets. Data suggests that the peer-to-peer lending market doubles each year, accounting for approximately USD6.4 billion globally.
Crowd-funding works on the basic premise that small amounts of money, obtained from a large number of individuals or organisations, are used to fund a project, business or personal loan, and other needs through an online web-based platform. The benefit is the spreading of risk: investors are individuals within a larger audience who raise the funds small incremental amounts. Additionally, crowd-funding provides an affordable and attainable option for raising capital for small start-ups. In return, small investors receive the opportunity to participate in investment opportunitieis that might not otherwise be available to them.
OICV – IOSCO Working Paper. Crowd-funding: An Infant Industry Growing Fast
Bloomberg, Peer-to-Peer Lending, by Noawh Buhayar, June 7, 2017