ALTERNATIVE SOURCES OF FINANCING
Abstract
In today's world, the finance and investment sector is becoming increasingly dynamic and diverse. One of the key trends is the growing interest in alternative sources of financing, which provide businesses and individual investors with new opportunities to obtain and provide financial support. This article provides a detailed analysis of alternative sources of financing, including crowdfunding, venture capital and cryptocurrency initial public offerings (ICO). It also discusses the role and importance of alternative sources of financing in modern business and the impact of technological innovations on this sector. Alternative sources of finance encompass a wide range of financial instruments and platforms that allow businesses and individuals to raise and invest funds outside of traditional banking and financial institutions. One of the most popular categories is crowdfunding, which requires raising funds from a large number of individual investors through an online platform. Another important category is venture capital, which has evolved into investing in start-ups and innovative businesses with high risk but significant return potential. ICOs are another aspect of alternative sources of funding that is proving popular. This method allows startups and projects to raise funds by issuing cryptocurrency tokens. The article compares the categories of alternative sources of financing and identifies crowdfunding, venture capital and ICO as three key categories of alternative sources of financing with their unique features and advantages. Crowdfunding allows mass investors to invest in various projects, venture capital business is aimed at supporting innovations and start-ups, and ICO allows issuing tokens to raise funds. The impact of the development of Internet technologies and blockchain, which have changed the landscape of alternative finance, is also identified. Online platforms and distributed ledgers can create secure and accessible channels for attracting investment. This makes alternative sources of finance more attractive to investors and businesses. Technological innovations are also helping to improve risk assessment and credit scoring processes, making alternative finance more predictable and efficient.
References
1. Kuzmin O. & Lytvyn I. (2019) Venchurnyy biznes: osoblyvosti rozvytku ta hlobalizatsiyni aspekty [Venture business: development features and globalization aspects]. P. 412. (in Ukrainian)
2. Sytnik N. I. (2018) Kraudfandynh: novi mozhlyvosti ta trendy [Crowdfunding: new opportunities and trends]. Scientific Bulletin of Kherson State University. Sereya: Economic Sciences, no. 31, pp. 187–192. (in Ukrainian)
3. Vasiliev O. V. & Matyushchenko S. S. (2016) Kraudfandynh – suchasnyy instrument finansuvannya rozvytku intelektualʹnoho kapitalu [Crowdfunding is a modern tool for financing the development of intellectual capital]. Investments: practice and experience, no. 18, pp. 36–40. Available at: http://www.investplan.com.ua/pdf/18_2016/8.pdf (in Ukrainian)
4. Bahur N. V. (2021) Kraudfandynh ta kraudsorsynh yak instrumenty stymulyuvannya rozvytku rehioniv ta hromad [Crowdfunding and crowdsourcing as tools for stimulating the development of regions and communities]. Efficient economy, no. 9. DOI: https://doi.org/10.32702/2307-2105-2021.9.85 (in Ukrainian)
5. Manaenko I. M. & Didenko A. S. (2017) Kraudfandynh yak innovatsiynyy instrument rozvytku biznesu [Crowdfunding as an innovative tool for business development]. Actual problems of economy and management, no. 11. Avaolable at: http://ape.fmm.kpi.ua/article/view/102780 (in Ukrainian)
6. Rubanov, P. (2017) Alternative Finance Business-Models: Online Platforms. Financial Markets Institutions and Risks, no. 1(3), pp. 92–98 DOI: https://doi.org/10.21272/fmir.1(3).92-98.2017
7. Sevara, Y. (2023) Alternative Financing Methods of Investment Projects. Gospodarka i Innowacje, no. 35, pp. 416–421.
8. Lukauskas T. & Puleikienė K. (2023) Possibilities of attracting financing sources to start-up companies. Set of articles. P. 112.
9. Kalandarov A. (2023) Legal Regulation of Equity-Based Crowdfunding. World Bulletin of Social Sciences, no. 25, pp. 25–29
10. Vyas A., Ramakanth H. & Kaur J. (2023) A Study on Crowdfunding as an Innovative way to Finance Startups. Shanlax International Journal of Management, vol. 10(4), pp. 5–9.
11. Dubey A. K., Shingte S. C., Siddiqui M. S. & Patil S. (2023) Crowdfunding using Blockchain for Startups and Investors. In 2023 7th International Conference on Intelligent Computing and Control Systems (ICICCS). IEEE. Pp. 1400-1405.
12. Zhuk O. (2023) Crowdfunding as an Innovative Financing tool for Entrepreneurship in Creative Economy. Innovative Management of Business Integration and Education in Transnational Economic Systems. P. 288.
13. Birch K. (2023) Reflexive expectations in innovation financing: An analysis of venture capital as a mode of valuation. Social Studies of Science, vol. 53(1), pp. 29–48.
14. Lerner J. & Leamon A. (2023) Venture capital, private equity, and the financing of entrepreneurship. John Wiley & Sons.
15. Fried V. H. & Hisrich R. D. (1994) Toward a model of venture capital investment decision making. Financial management, vol. 23, no. 3, pp. 28–37.
