Crowdfunding and its viability in the local scenario

Abstract

This dissertation discusses whether crowdfunding could be a viable source of finance in Malta, especially for local entrepreneurs and SMEs as an alternative to the traditional forms of finance. Crowdfunding is growing at a rapid pace internationally, yet Malta is still lagging behind in terms of awareness and participation. Thus, it is necessary to fully assess whether crowdfunding can be boosted in Malta and what the economic impacts of doing so would be. In this study, individuals with first-hand experience in crowdfunding were interviewed as well as representatives from various financial institutions. The purpose of these interviews was to get an all-encompassing view of crowdfunding in the local scenario. Subjects discussed include the current level of awareness and how this can be improved, a comparison of crowdfunding to the traditional forms of finance, what factors would stimulate successful crowdfunding campaigns, motivational factors leading to participation in crowdfunding and the viability of a local crowdfunding platform, amongst others. The results indicate that there currently are a number of obstacles hindering crowdfunding from flourishing in Malta including a limited amount of awareness about crowdfunding as well as a lack of a reputable platform. However, it is also shown that crowdfunding is a good alternative for riskier ventures proposed by individuals and SMEs to obtain funding since banks may not be willing to take on this risk. The general feedback from locals who have first-hand experience with crowdfunding is positive and thus, it is important that solutions to these obstacles are found in order to reap the benefits of crowdfunding. Proposed solutions to these obstacles include the need for a concentrated effort to educate the local population on crowdfunding and on ways to create successful crowdfunding campaigns. Moreover, a local crowdfunding platform operated by the Malta Stock Exchange which is accessible to international participants also seems to be a feasible idea to boost the amount of crowdfunding in Malta.