Introduction

In the past decade or so, several online platforms have come up across the globe helping people to bring their unique ideas or aspirations to come to life by providing a medium for people to come together and raising funds. Crowdfunding is one such method of raising capital through the collective effort of friends, family, customers, and individual investors. In a way Crowdfunding is the social media version of fundraising. Crowdfunding is a form of crowdsourcing and alternative finance. The inputs of the individuals in the crowd trigger the crowdfunding process and influence the ultimate value of the offerings or outcomes of the process. Each individual works as an agent of the offering, selecting and promoting the causes in which they believe playing a role of a donor providing help on social projects. In some cases, they become shareholders and contribute to the development and growth of the offering. Individuals circulate information about causes they support in their online communities, generating further support. A variety of crowdfunding platforms have emerged to allow ordinary web users to support specific philanthropic projects without the need for large amounts of money. 

Types of Crowdfunding:

Just like there are many different kinds of capital round raises for businesses in all stages of growth, there are a variety of crowdfunding types. Which crowdfunding method you select depends on the type of product or service you offer and your goals for growth.

In earlier times, if any person or an organization needed help, they used to approach either an investor or seek help from people they know. But now, due to the internet, the world is changing. Anyone can start a crowdfunding campaign for any personal or social cause they believe in, and people all over the world can contribute towards it. Crowdfunding is the process of generating finance through small and voluntary contributions made by a large number of people over the internet. Such a step has in recent years impacted many startups and Small and Medium Enterprises (SMEs). A sports crowdfunding campaign generally comes with a compelling story that sheds light on the background of the athlete, their achievements and requirements, and their struggle for meeting their requirements. Although crowdfunding is still at a growing stage in India, the trend is catching up with the rising age of digital technology. They can create project pages, including videos, and decide the rewards which they can provide to the backers of the project.

There have been examples of successful crowdfunding. In 2014 a five-time Olympian Shiva Keshavan was left in a quandary when he couldn’t afford a sled to take part in the upcoming 2014 Winter Olympics held at Sochi. But the luge racer turned to crowdfund and reportedly managed to raise Rs 9.1 lakhs via ketto.org.

The Indian Women’s Sailing led by medal-winner Rohini Rau (36) had participated in the World Sailing Championship held in Spain in July. The possibility of the team to participate at the grand stage was brought to life by crowdfunding as well. Over 5 lakh was raised through the Milaap Organization.

The Ice Hockey Association of India (IHAI) came up with the idea of launching a crowdfunding drive on social media – they wanted to raise funds for the team to travel to Kuwait for a tournament. The association launched the #supporticehockey campaign with the aim of raising 7-8 lakhs. Their story was picked up by Sportskeeda, and the story then became viral. The response was tremendous. Various corporate houses, adventure travel agencies, sports fans, and even public figures such as Anand Mahindra, Chairman of the Mahindra Group and Cricketer Gautam Gambhir chipped in.

Government Regulations pertaining to Crowdfunding in India

In India, the concept of Crowdfunding is catching up fast and there is a compelling need to put in place a legal framework to regulate Crowdfunding. Crowdfunding as a source of finance has been competing strongly with other sources of finance like angel investing, venture capital, and banks. Lesser restrictions and the presence of funders on digital platforms has been responsible for stimulating the growth of these platforms all the more in view of which the Securities and Exchange Board of India (“SEBI”) had issued a Consultation Paper in 2014. The SEBI Consultation Paper furnishes proposals for a regulatory framework governing the procedure of Security based Crowdfunding methods for Startups and Small and Medium Enterprises (SMEs). The SEBI Consultation Paper proposes to place restrictions on the kind of companies that can raise funds through Security based crowdfunding. Peer-to-Peer Lending is regulated by the Non-Banking Financial Company– Peer-to-Peer Lending Platform (Reserve Bank) Directions, 2017 (The Directions). Also the Reserve Bank of India (RBI), in April 2016 released a consultation paper on peer-to-peer (P2P) lending that outlined the pros and cons of regulating the sector and proposes a suitable framework for regulating the same. However, so far there are no pertinent laws formulated in respect of crowdfunding in India. 

Conclusion

To conclude, Crowdfunding in India is still new, and companies like Impact Guru, Ketto, Milaap, Sportskeeda, Fueladream, and many more are bringing about a revolution in online fundraising activities to enable new aspirants in the field of sports and related activities to meet their needs for prospering in their talent fulfilling their dreams. India could be one step closer to being a good sporting nation if only our sports associations figured out ways to build on existing interest and enthusiasm for sports and organizations facilitating the development of the sports sector and bring them in the mainstream by regulating the sector in an effective way.

-Adv.Vaidehi Harshad Samant

Advocate, Mumbai

1. https://www.sportskeeda.com/winter-sports/interview-shiva-keshavan-winter-olympics-2014-luge/2

2. https://thebridge.in/others/crowdfunding-fuelling-growth-indian-sports-one-dream-time/

3. https://indianexpress.com/article/sports/sport-others/cash-strapped-ice-hockey-team-of-india-looks-for-hope-online/

4. https://swarajyamag.com/culture/how-crowd-funding-is-shaking-up-the-sports-ecosystem-in-india

5. https://www.sebi.gov.in/sebi_data/attachdocs/1403005615257.pdf

6. https://rbidocs.rbi.org.in/rdocs/Content/PDFs/CPERR280420162D5F13C3A2204F4FB6A2BEA7363D0031.PDF