Dan Marom, author and a well known name in the start-up circle, hailed India as the fastest growing start-up ecosystem at the Indian National Crowd-Funding Conference earlier this month. He spoke to ROHIT P.S. on the Indian crowd-funding scenario during the conference.
What is the crowd-funding scenario in India like?
Crowd-funding is the pooling of resources by a group of people for a common goal. Crowd-funding is not new to India. There are many instances of organisations reaching out to common people for funding. However, the emergence of platforms that promote crowd-funding is fairly recent to India. These platforms help start-ups or small businesses meet their funding requirements. Now that platforms have emerged, there is a need for crowd-funding regulation in India.
How does crowd-funding here differ from that in the West?
In the West, a start-up or a small business can solicit funding from the crowd by offering attractive returns on investment within the financial spread (difference between interest rates on loans and the interest offered by financial institution deposits). This spread is relatively much smaller in India and thus makes it more difficult to attract investors. Currently, no crowd-funding regulation exists in India, but the Securities and Exchange Board of India (SEBI) released a consultation paper last year where it spoke about need for regulation.
What are the risks in crowd-funding a start-up or a small business?
Crowd-funding is unsecured and carries risks, though high returns are often guaranteed. Without adequate regulation, fraud is one major concern for investors. With regulation, influence of strong investors on the organisation and its management can be levelled. Intellectual property laws should develop, commensurate with crowd-funding regulation to secure proprietors.
Are you involved with any of the Indian crowd-funding platforms?
Though I have not visited India before, I am associated as advisor or mentor with three Indian crowd-funding platforms.
Which industries in India do you see benefiting from crowd-funding?
Besides healthcare, technology, music and arts, real estate is expected to immensely benefit from crowd-funding in the coming years.
Without adequate regulation, fraud is one major concern for investors. With regulation, influence of strong investors on the organisation and its management can be levelled
Dan Marom, crowdfunding expert
