Research On Application Of Crowdfunding In The Republic Of Armenia

The fundamental objective for the development of any country in the world is to create and maintain a stable economic growth and the Republic of Armenia is not an exception.Small and Medium Enterprises(SMEs)represented 99.7%of all registered legal entities as of 2015,according to the NSSA of Armenia.It is also worth mentioning,that according to a 2015-2016 analysis by OECD,60%of startup businesses survive up to 3 years(due to financial resources restriction),and those startups that keep up longer,disproportionate to their total number(relatively large)create workplaces and stimulate economic growth.Nowadays,the lack of ability of these companies and individuals to have access to funds from traditional sources has rendered numerous possible ideas not to have a chance to reach their goals.Even when promoters of such business are able to offer business opportunities,maintaining and expanding the operations is tough to attain without sufficient funding,accordingly putting the economy of their important contributions at risk.Crowdfunding is a multi-billion dollar worldwide industry predicted to surpass the size of the global venture capital industry,seems the preferable alternative method to raise funds for a business project or social motive through online platforms.Presently crowdfunding in Armenia is still in a very early stage of growth.Despite its low recognition among entrepreneurs,several projects have been completed successfully,some of which are in the long run progressed into sustainable business startups.However,these projects did not raise funds in Armenian based crowdfunding platforms,but through well-known international crowdfunding platforms.Therefore,the development of this concept and thus the implementation of proposed changes were motivated by the necessity of inserting new alternative financial mechanism of fundraising,which may become a huge impulse for the development of the Armenia's economy.This study targets to educate entrepreneurs on the diverse characteristics of crowdfunding,in order to have a better knowledge and understanding on how to raise funds through an alternative reliable source for their projects.This will be achieved through deep review of existing literature,both on crowdfunding and on related financing methods.This study also persuades to understand and determine peoples' attitude towards crowdfunding financial donation and the main motives of crowdfunding participation.The study is exploratory,thus the method adopted is qualitative,through focus group dissociations,but with a survey instrument designed for the purpose.Crowdfunding is discussed as an alternative way of financing projects,with a focus on small,entrepreneurial ventures.The structure of the study is as follows:first sections provide an outline of crowdfunding and discusses existing research on the topic.The follow-up sections places crowdfunding into perspective of entrepreneurial finance and thereby describes factors affecting entrepreneurial partialities for crowdfunding as source of finance.Thereafter,we elaborate different business models used to raise funds from the crowd,in particular with respect to the structure of the crowdfunding process.Building on this discussion,we present and discuss exploratory study,thus the method adopted is qualitative,through focus group dissociations,but with a survey instrument designed for the purpose.Finally we conclude with suggestions and recommendations for entrepreneurs seeking to make use of crowdfunding and outlining the adaptation issues of crowdfunding development in the Republic of Armenia.Most importantly through the suggestions which are presented in chapter six,despite the fact of being approximately new source of financing,all the necessary conditions can be created for full-grown,accessible and convenient way for subsidization burgeoning entrepreneurs.On the other hand,that will help to allocate funds to projects which are hard to raise funding in traditional way.Despite all that,there are a number of fields to which this research can add new insights through conducted research.1.Firstly,there has been very little research focused specifically to the people's behavior crowdfunding participation globally,and non in the Republic of Armenia.Particularly through the focus group discussions where different layers of society were interviewed.Therefore,an evaluation of Armenians' attitude towards crowdfunding as a funding method,contributes to the basic conceptual foundation for the funding approach in the context of entrepreneurial finance.2.Through the insight provided in this paper,there will be innovative contribution to business practices,allowing to build a community that supports the entrepreneurs,which is a critical factor for crowdfunding to be more profitable than traditional funding.