Technology environment and crowdfunding platforms in Brazil.
| Autor | Lima, Afonso |
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Introduction
From the birth of an idea to the generation of a new business, regardless of what area it is (medicine, psychology, math or arts) until its roll-out, obtaining financial resources proves to be a strong obstacle to be overcome (Greco, 2012). Projects with relevant objectives often do not materialize because they do not meet the requirements of traditional financial institutions operating in the market.
The financial market has many institutions that deal with intermediation among these economic agents, such as commercial banks, credit rights investment funds (FIDCs), securitizers and credit unions (Assaf Neto & Lima, 2014; Banco Central do Brasil, 2018; Fortuna, 2015). However, all these financial institutions require a standard for documentary formalization and proof of economic capacity, a fact that inhibits several entrepreneurial initiatives precisely because they are not prepared for such requirements (Greco, 2012). Some examples of these requirements are: the payment capacity (for legal entities), in which the borrowers' cash flows as well as their equity are evaluated; in some cases, balance sheets are also requested in order to prove the cash liquidity that will enable them to honor the payment of the installments of the requested financing; social and additive contracts (for legal entities), which serve to certify the time of incorporation of the company, as well as its corporate constitution, in order to understand the behavior of the company and its partners in the market; and proof of income (for individuals), which must be duly linked to an employer linked to the Ministry of Labor, or via Income Tax, which assesses the net income that the proponent receives in their income statement.
In this context, crowdfunding emerges as a less bureaucratic and possibly more accessible alternative by adopting a shared model for providing credit to projects. The term comes from the English language and literally means "funding from a crowd," having adopted as standard the "crowdfunding" term. Its operation is based on multi-person fundraising for a common goal. Today it has the reinforcement of digital tools to give it more dynamism and organization.
It can be said that its beginning was in 2005, reaching scale in 2009, with the launch of the Kickstarter platform in the USA, from which the term crowdfunding was more widespread. In Brazil, crowdfunding was triggered in 2011 from the pioneering platforms Catarse, Queremos!, Benfeitoria and SciBite. Crowdfunding occurs when several people identify with a project and decide to make financial contributions to support it through some incentive.
The growth of crowdfunding in the world is expressive; in 2014, the crowdfunding market grew by 167 percent, representing an increase of $16.2bn. In 2013, the World Bank projected that the segment could move up to $96bn by 2025 (infoDev, 2013). Such data denote the representativeness of future scenarios for the growth of this practice.
By seeking to identify and understand the specific factors that may influence the operations of these projects, this paper presents the following research questions:
RQ1. What are the main influences of the external environment to the functioning of crowdfunding platforms in Brazil?
RQ2. How can these influences be characterized?
Thus, the research objective is to analyze the influence of the technological segment of the general environment on crowdfunding platform operations in Brazil.
This work can be justified by the gap in studies that focus on platform management, especially the analysis of the strategic environment. Business environment monitoring is an alternative that enables decision makers to use data and information to better understand the external elements and interconnections of various sectors, translating this understanding into the required planning and decision-making processes. Even if timidly, the results achieved here serve as a focus of attention to the main factors that may be responsible for relevant changes in the actions of crowdfunding platforms.
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Literature review
The practice of collaboration has always existed in society, however, only in recent years there have been more discussions about the so-called collaborative economy, of which crowdfunding is part. This is because digital platforms and other large-scale mediation technologies are recent, although societal collaboration goes back to the beginning of civilization (Sutherland & Jarrahi, 2018). The literature about the main concepts and the theories necessary to understand this research are presented in this section, specifically about the functioning of crowdfunding platforms and the influence of external environment aspects, especially the technological segment, on organizations.
2.1 Crowdsourcing and crowdfunding platforms
The study on crowdfunding should focus on understanding the crowdsourcing practice, because it has given it the fundamental operation principles: collaboration and the use of technology to give more dynamism to the process. The word crowdsourcing was first registered in June, 2006 in the WIRED technology magazine, where Howe (2006) analyzed companies outsourcing tasks and solving problems to a greater number of people in order to accelerate results considering multiple answers obtained at a much lower cost.
According to Aguiar (2016), crowdsourcing is defined as:
[...] a type of participatory online activity, in which individuals, institutions, non-governmental organizations or companies propose a voluntary commitment to the accomplishment of a task to a group of diverse, heterogeneous and knowledgeable people, through an open and flexible call. Accomplishing the task, which has a variable complexity, in which the crowd must participate by bringing their work, money, knowledge and/or experience, always implies mutual benefit. The user will receive the satisfaction of their need, which may be economic, social recognition, self-esteem or the development of individual skills, while the crowdsourcer will obtain and use to their advantage what the users brought to the enterprise, which will depend on the type of activity requested. This activity generates platform-operated businesses that are identified as crowdsourcing.
The uses of crowdsourcing are diverse; new models and categories are developed and others fall into disuse over time. Crowdsourcing has become a kind of umbrella term for other terms (Monteiro, 2014). Thus, the use of crowdsourcing paved the way for the first steps of crowdfunding with the technology base that is used today and with its concept of collaboration to achieve a common goal. The actors that make up the crowdfunding market are:
* The crowdsourcer, agent or institution providing the crowdfunding platform. The platform is the virtual space where projects are exposed and transactions are made between proponents and supporters. In this space, the registrations of basic data of agents are also made. The platforms record all the information necessary to follow up on each project.
* The crowd from which a portion of its users become consumers or supporters of crowdfunding project products and services (and also producers, as they financially support and publicize the project on their social networks, mobilizing other users and, therefore, generating new support). The supporter is anyone, either individuals or legal entities, who makes cash donations for any projects that are convenient for them.
* The proponents or entrepreneurs are the creators and responsible for the project; there is no need for a specific qualification for a person to be a proponent, however, the more information is disclosed about the qualities of the project and the proponent (s), the greater is the likelihood of success in the funding.
There are currently four categories of crowdfunding practiced on the world market, according to Belleflamme and Lambert (2014):
(1) Donation (crowdfunding without a reward): modality in which the donor, after making their donation, receives nothing in return, except the satisfaction of having contributed to a project that they identified with. This modality generally applies to social and humanitarian projects. Its main front is philanthropy, thus requiring no financial return.
(2) Reward (crowdfunding with a reward): this is the most commonly found modality. It is characterized by the supporter receiving a reward in return for their donation. It is based on rewards, and such a model allows the supporting agent to receive something in return, such as a small award or even his or her own name associated with the project receiving the donation. This reward is stipulated by the proponent upon registration of the project on the crowdfunding platform.
(3) Equity crowdfunding: in this category, the investment is made directly in the company's share capital, and the proponent aims to receive dividends on their invested amount. It refers to financing for micro and small companies through the use of stocks (equity based).
(4) Debt crowdfunding: based on small loans (lending based), this modality allows supporters to get their money back plus interest; the donor assumes the position of creditor. Such classification is also called peer-to-peer. The supporter contributes with values in a project to which they seek return, they agree on a period for the return and stipulate the rate they expect to receive.
Still regarding remuneration, it is worth mentioning the remuneration of the platform itself, which may vary according to the modality of the projects: "all or nothing" (modality in which the project will only receive the amount collected if it is equal to or higher than the amount requested at the time of registration and within the previously defined and informed period) or flexible (modality in which the project will receive the amounts collected regardless of whether or not it achieved the amount requested at the beginning within the specified...
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