Is Sri Lanka Ready to Accept Crowdfunding as a Fundraising Mechanism?

Abstract

The emergence of information technologies has promoted the alternative finance industry to fund entrepreneurial interventions all over the world. Crowdfunding is one of the viable alternative sources of financing for start-up ventures. The typical process is that a pool of investors is funding a certain venture via an internet platform expecting a monetary or non-monetary return. Even though this method is well popular in the developed world, the developing world is still in its infancy in using it for fund generation. Adaptation of crowdfunding requires certain conditions in the economy such as technology, culture, regulations, etc. Thus, the aim of this paper is to assess the readiness of accepting crowdfunding in Sri Lanka. The crowdfunding readiness- self-assessment tool proposed by the World Bank was used for the survey to study the level of readiness of the country in terms of technology, culture, capital, and regulations. The questionnaire included 26 items representing four main pillars of the assessment tool. 78 responses received from the online survey were used for identifying the current readiness level of the country to implement crowdfunding. The highest value of the four main sections of the assessment tool was obtained for technology while the other three sections obtained values between 2-4, which shows that there is a potential. But on the other hand, it was evident that some adjustments to the existing conditions are needed. The results of the study would be useful for policymakers and platform owners.