From Charity to Investment
From Charity to Investment

Perspectives on the New Financing Parameters of Entrepreneurial Projects in Developing Countries

Summary/Abstract: This exploratory article aims at discussing the implementation of crowdfunding projects organized by charitable organizations for the funding of developing country based entrepreneurial projects. The recourse to this type of financing is known to be structurally related to an inability of the promoters of such projects to use bank loans or venture capital. Crowdfunding, and increasingly equity crowdfunding specifically, is indeed based on trust mechanisms similar to the rationales for the use of donations by similar project bearers and non-profit organizations (NPOs) in the past. Classical regulatory mechanisms usually presented in the context of charitable organizations seem ineffective when applied to the crowds supporting these projects, mainly because of the low financial commitment of resource providers from supporting communities and their atomicity. Beyond the issue of identification of stakeholders present during the emergence of such crowdfunding projects, it is the question of the regulation and effects of potentially deviant behaviors in this transition period from donation to equity based crowdfunding that is discussed. Therefore, reducing the organizational involvement of NPOs, crowdfunding platforms could offer a set of control mechanisms in this economic context, but also operate an actual change in financing leverage operations for emerging countries’ projects.

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