Question.829 - Goal: Prepare a research paper on the topic - Innovative Funding Prospects Submission Instructions: The paper is to be clear and concise and students will lose points for improper grammar, punctuation, and misspelling. The paper is to a minimum of 1000 words in length, current APA style, excluding title and references, with support from at least 3 references. Complete and submit the assignment by 11:59 PM ET Thursday.
Answer Below:
Entrepreneurial Research Paper Armon Love St. Thomas University BUS 536: ENTREPRENEURSHIP Professor Justin Peart February 18th, 2023 Entrepreneurial Research Paper Innovative funding refers to employing a non-conventional approach to raise funds for an entrepreneur's innovative ideas or concepts. Fundraisers are some of the initiatives toward Innovative funding prospects. Innovative fundraising opportunities are novel and inventive methods for organizations to gain financial resources for their projects and activities. While conventional funding sources such as government grants and contributions continue to be important to many organizations, increased competition for financing has prompted a quest for alternative funding models. This research paper will look at various new funding options that have developed in recent years, such as crowdsourcing, social impact bonds, impact investment, and corporate social responsibility. Crowdfunding Crowdfunding is a financing mechanism in which small sums of money are raised from a large number of individuals, generally through internet platforms. Crowdfunding has grown in popularity in recent years, and it is expected to produce more than $34 billion in fundraising globally by 2020. (Crowdfunding Industry Report). Crowdfunding has shown to be a successful approach for groups to finance their projects and efforts since it allows them to tap into a vast pool of prospective supporters and promptly and simply acquire cash. Bonds with a Social Impact Social impact bonds (SIBs) are a comparatively recent funding concept in which private investors support social programs and initiatives in exchange for a monetary reward. SIBs are organized in such a way that the investors bear the financial risk as opposed to?the administration or the organizations executing the programs. If the initiatives provide the expected results, the investor's profit and the administration save money in the long term. SIBs were utilized to pay for a wide range of social activities, notably early childhood education, skills training, and the avoidance of unemployment. Investing for a Social Purpose Impact investing is a type of financing that involves investment in firms or organizations that seek both financial rewards and beneficial social or environmental effects. Impact investors strive to help organizations that try to address important social and environmental issues while simultaneously earning a profit. Impact investing has grown in popularity in recent years, and it is believed to be a $715 billion worldwide industry (Global Impact Investing Network). Corporate social responsibility (CSR) Corporate social responsibility (CSR) is a funding model in which businesses incorporate social and environmental concerns into their operations. This might include things like contributing a percentage of revenues to charity organizations, lowering the company's carbon impact, or encouraging staff volunteerism. Consumers value CSR and are more inclined to support firms that exhibit a priority for social and environmental responsibility. As a consequence, several businesses are implementing CSR into their business strategy in order to attract and keep clients while also distinguishing themselves from the competition. In order to understand how it could benefit the entrepreneurs and the target industries, Financial resources: Innovative finance opportunities provide businesses access to funds that might otherwise be unavailable through standard financing channels (Chen, Liu, & Ye, 2018). Crowdfunding sites, for example, enable businesses to obtain cash from a huge number of people, whereas angel investors might give early-stage investment that is not accessible from banks or venture capitalists. More flexibility: Innovative finance opportunities are frequently more flexible than traditional financing approaches. Revenue-based finance, for example, enables businesses to return investors depending on a proportion of their monthly income; this may be more affordable than concessionary interest installments (Bhargava, 2019). Improved social effect: Several novel financing opportunities, such as impact investing and crowdfunding portals that promote socially responsible initiatives, are focused on enhancing social and environmental impact (Chen et al., 2018). While on the other hand, it is also important to understand the limitations and disadvantages of employing innovative funds; it is subjected to higher risk: New finance opportunities are frequently riskier than established financing approaches. Revenue-based finance, for instance, may demand entrepreneurs to share a bigger amount of their earnings than they would with a typical loan, which might be economically dangerous (Bhargava, 2019). Complexity: Alternative fundraising opportunities might be more complicated and harder to negotiate than standard financial techniques. Blockchain-based fundraising systems, for example, may need a greater level of technical competence than traditional investment approaches (Chen et al., 2018). Restricted investor pool: Because innovative fundraising opportunities may have a smaller pool of possible investors than conventional financing techniques, the quantity of capital available to entrepreneurs may be limited (Bhargava, 2019). To summarise, although creative funding opportunities provide benefits such as expanded access to cash, better flexibility, and the possibility for a higher impact on society, they also have downsides such as increased risk, intricacy, and a limited pool of possible investors. While evaluating alternate funding possibilities for their companies, entrepreneurs should thoroughly examine these criteria. Innovative fundraising opportunities have become critical for organizations trying to support projects and activities in a highly competitive funding climate. Crowdfunding, social impact bonds, influence investment, and corporate social responsibility are just a few of the new funding models that have arisen, each with its own set of advantages and disadvantages. While these approaches may not be appropriate for all organizations, they may provide innovative and creative methods to support projects and activities and should be evaluated as part of a larger fundraising plan. References Bhargava, A. (2019). Revenue-based financing: An alternative to venture capital. Harvard Business Review. https://hbr.org/2019/04/revenue-based-financing-an-alternative-to-venture-capital Chen, X., Liu, L., & Ye, Y. (2018). Innovative financing and entrepreneurial finance. International Journal of Financial Studies, 6(4), 91. https://doi.org/10.3390/ijfs6040091 Crowdfunding Industry Report. (2020). Retrieved from https://www.fundera.com/resources/crowdfunding-statistics Global Impact Investing Network. (2021). What is impact investing? Retrieved from https://thegiin.org/impact-investing/ Lepore, A., & Rivello, R. (2016). The rise of social impact bonds: Can this innovative funding model scale solve complex social problems? Public Budgeting & Finance, 36(4), 33-52. Porter, M. E., & Kramer, M. R. (2006). The link between competitive advantage and corporate social responsibility. Harvard Business Review, 84(12), 78-92.More Articles From Business Management
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