Two parameters can make our journey in finding an answer to this important question very easy. First is the money. Since crowdfunding is principally all about money and money alone, it becomes very important to have Crowdfunding Rules.
- It is important for the investing point of view to have some basic security for the money invested.
- It is also important from the business point of view to have some rules set beforehand to make the dealings with investors smooth and complain free.
After money, the second parameter is the crowd.Since crowdfunding is now the worldwide phenomenon; it has an enormous rush of people. Therefore, crowdfunding rules become indispensable in order to ensure that:
- There is no chance for a fraud.
- There is no room for the cheaters to make a fool of people.
- Discipline is maintained in such a huge crowd.
In the context of the above parameters, Crowdfunding Rules can be regarded as the foundation stone of the crowdfunding industry.
Here are Some Basic Crowdfunding Rules
For people who wish to go for the crowdfunding, either as investors or as entrepreneurs, they need to know some basic rules in order to get the successful experience with the crowdfunding industry.
- Entrepreneurs or small startups, they have a legal backing for seeking money in the form of investments from the general public.
- Any investor can invest in equity-based crowdfunding and any company, startup or entrepreneur can generate money directly from the people.
- Any company, startup or entrepreneur can publicly announce or promote information about the investment opportunities in his/her company.
- An investor can invest only a limited amount of money; in order to make them risk-free to a certain instant in case of any unexpected results.
- The transactions are to be done only through the registered crowdfunding platform, i.e., through an intermediate platform.
These Crowdfunding Rules signify the great development that has taken place over the time to make crowdfunding the best platform for investors to invest and for companies or startups to fund their business projects. Moreover, these Crowdfunding Rules are not in favour of investors and businesses only, but for the crowdfunding industry as well.
What Crowdfunding Rules Ensure?
- Crowdfunding Rules maintain discipline in crowdfunding industry.
- Crowdfunding Rules protect investors from any risk factors either associated with investments or through fraud and cheating.
- Crowdfunding Rule keeps tricksters away by asking companies to disclose every bit of information about their companies.
- Crowdfunding Rulesensurethe security of the money invested by making transactions mandatorily to be done through registered platforms.
- Crowdfunding Rules help investors to grow as investors by limiting the amount they can invest. It gives them an opportunity to invest again and again and learn this trade closely.
- Crowdfunding Rules also reduce the risk when it limits the investment amount. Usually, with the huge amount of money the risk factor increases proportionally.
Crowdfunding Rules may seem preventive apparently but when closely examined, they are good anyway.
