Impact of Mid-term Elections on Crowdfunding

The 2014 Midterm elections were a sweep for the Republicans. What is the impact on crowdfunding?

The breakout of the US Congress post-election is:

House of Representatives -186 Democrats, 244 Republicans
Senate - 46 Democrats, 53 Republicans (shown below):

The Republican majority in the House is significant. In political reality, this means that the Republicans control the government.

Legislative priorities identified so far include:

· Significant tax reform

· Health care

· 401K reform

· Obama care repeal

· Increase in number of visas granted to the high tech industry

· Copyright protection

Note that crowdfunding is not on this list. Nor is small business.

Conventional wisdom states that Republican control means a pro-business atmosphere. While this should be good for crowdfunding, the disruptive impact that crowdfunding has on large financial institutions may be a barrier. We know that large financial institutions, with much to lose from crowdfunding, are well represented by the Republican Party. The Republican Party is the party of big, not small, business. These large institutions will seek to slow the adaptation of crowdfunding.

Opinion by William Michael Cunningham

Research by Jing Chen & Jianning Zhang, Masters Candidates in Accounting, Smith School of Business, University of Maryland. They are both Crowdfunding Research and Development Interns, NCS, Fall, 2014.

Comments

Crowdfunding Accounting 101 - Revenue Recognition in Crowdfunding

A start-up using crowd funding to create a product is different from a normal company. The start-up has cash inflows from donations but does not have a product, yet. In this situation, we recommend using completed-contract method to recognize revenue. Under this way of thinking, we assume the start-up is akin to a project or a long-term contract. The crowdfunding company will find it difficult to estimate the revenue from crowdfunders and, hence, the cost of rewards or perks. Under International Financial Reporting Standards (IFRS) and GAAP guidelines, if the firm cannot reliably measure the outcome of the project, revenue should be recognized based on contract costs. These costs should be expensed when incurred. Profit is recognized only at the completion of the project. In summary, for crowdfunding companies, revenue, expense, and profit are recognized only when the crowdfunded product is actually manufactured. 1 For example, assume that AAA Corp. wants to manufacture bicyc...

Top 50 Crowdfunding Campaigns: Fifty Most Successful Crowdfunding Campaigns

Top 50 Crowdfunding Campaigns: Fifty Most Successful Crowdfunding Campaigns Kindle Edition https://www.amazon.com/gp/product/B00RKK4NL0/ref=dbs_a_def_rwt_bibl_vppi_i0

Top 50 Crowdfunding Campaigns

The chart below results from an analysis of the Top 50 crowdfunding campaigns on Indiegogo, 'Top' measured by total dollars raised. The X axis shows the dollar amount of the reward or perk ($1 to $10, $11 to $20, etc.) The Y axis shows the cumulative number of rewards/perks collected across all 50 campaigns, so the chart shows that, for the top 50 crowdfunding campaigns on Indiegogo, 100,000 rewards/perks with a value ranging from $1 dollar to $10 dollars were selected by supporters. Normally, we might expect this chart to be convex, declining steadily from $1 to $5000. This is not what we see, however. It seems that people are willing to donate small dollar amounts, up to about $50, and then contributors look to donate at least $100. What's going on here? To explain this phenomenon, classify backers into two categories: 1. The first category are people who simply want to help. They donate less than $50 dollars and do not donate for the reward (normally a T-shi...

Crowdfunding Now!

Search This Blog