Crowdfunding: Overview of the industry, regulation and role of crowdfunding in the venture startup

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Chapter: Five forces that shape the crowdfunding industry:
Porter s five forces model encompasses a generation of business practice and academic work. The basic premise is that even industries which appear different on the surface have similar underlying factors which drive their profitability. Following this framework, strategists are encouraged to move beyond direct competitive analysis and look into forces surrounding and shaping the target industry. The latest work by Porter (2008) himself goes a step further to stress the importance of subtle factors such as mutual interplay between seemingly unrelated industries and strategic decisions which tend to benefit the industry as a whole, rather than maximize profits of individual participants. Having this in mind, five forces analysis of the crowdfunding industry is conducted following the Typical Steps in Industry Analysis outlined in Porter (2008).
Crowdfunding is currently in an early stage of development and growing at a very fast pace. Between 2011 and 2012 the industry grew by around 80%, measured by the amount of money raised by the biggest crowdfunding platforms worldwide surveyed by Massolution (2013). The same consultancy forecasts an even faster growth for 2013, estimating value of the market at around 5 billion USD at the end of 2013. Crowdfunding, narrowly defined, is an intangible goods industry. The final aim is to produce funding for successful startups or realize specific projects and goals. From a different perspective, the goal could be to produce successful crowd investors and boost economic activity for whole regions. Most often though, crowdfunding industry is viewed from the angle of crowdfunding platforms (CFPs) which act as an intermediary connecting all the parties involved in the ecosystem. In this sense the industry can be viewed as a liaison, facilitator and provider of transaction services for participants. Consequently entrepreneurs or project initiators can be viewed as

Igor Micic is a M.Sc. in Economics with a keen interest for strategic management, entrepreneurial finance and investment strategies. Coming from an IT/software engineering background he successfully made a jump into the world of economics and finance, completing a 2-year economics and management program within one of the most prestigious business schools in Europe. He had numerous international experiences on the way doing internships in blue chip companies such as ENEL, ENI and London Stock Exchange Group as well as study periods at University of Konstanz and ETH, Zurich where he had chance to be lectured by some of the most prominent experts in the field of entrepreneurship, entrepreneurial risks and financial markets. He has been living in Serbia, Italy, Germany, Switzerland, Slovakia, Turkey and is always ready for new challenges and seizing new opportunities worldwide. In his free time he enjoys clubbing and travelling while always keeping an eye on FT & BBG headlines.