1.1 Background of the Study
The Asian financial crisis at the end of the 1990s was an instructive lesson for Asian economies. It exposed the pitfalls of participation in global capital markets. Wiser for this experience, prudent capital-market development is set to be the key foundation for sustainable growth among Asian economies. Fully functioning capital markets are not only crucial as a source of funding for governments and corporations, but also for creating new opportunities for external investors to tap Asian economic growth.
China is the world’s largest online alternative finance market by transaction volume registering $ 101.7 billion in 2015. Which is a 99% portion of the total volume of the total volume of Assia Pacific region. The average growth rate of 328% between 2013 and 2015 lending market is reached $ 1.46 billion in 2015.
In the year 2015, there was $ 102.81 billion USD in total online finance market in Asia-Pacific $ 101.69 bn in transaction volume equating 98.9% facilitated by China & rest of the reported market volume in 2015 was $ 1.12 billion. Asia Pacific region riched online alternative business funding by $ 686 million in 2015 growing from $ 103 million in 2013 to $ 191 million in 2014 with an average growth rate of 172% per year over 2013 to 2015-time period.
China is the world largest online alternative finance market. It has world’s largest internet user base (668 million) pre-requisites for the development of online alternative finance are smartphone penetration and M2M (machine-to-machine) connections. The growth of online finance market is unregulated until guidance issued by the people’s bank of China.
Through the geographical distribution of surveyed alternative finance platform in Asia-Pacific region. Height number of platforms are in China (376), next Australia (30). The volume of online alternative finance market is $ 42,000 in Sri Lanka 2015. It is also likely that there are material levels of financing volume raised online by international donation-based crowdfunding platforms channeling funding towards developing countries within the region.
The alternative finance platforms are rapidly growing, the evidence presented in 2016 report Harnessing Potential (Bryan Zhang, 2016) the position of real estate crowdfunding platforms as a subset of the alternative finance model is significant.
Crowdfunding principle is not a new concept. As (Hemer, 2011) states that both Mozart and Beethoren funded projects in 18th century with the contribution of interested parties. Hence the statue of Liberty in New York had its pedestal donated by more than 125,000 donors some of whom donated less than USD 1 to the project, but the term “crowdfunding” has only recently been developed.
In the globalized world, all activities are connecting with rapidly growing technology, which induces investor’s perspectives for seeking online financing method. As a result, the concept of crowdfunding immerged in the online finance market.
According to the Oxford dictionary Crowdfunding means “the practice of funding a project or venture by raising money from a large number of people who each contribute a relatively small amount, typically via the Internet” (Dictionary, 2018). (Paaul Belleflamme, 2013) define crowdfunding as ‘an open call, mostly through the Internet, for the provision of financial resources either in form of donation or in exchange for the future product or some form of reward and/or voting rights’. There are two overarching types of crowdfunding model that present different threats to the systems they are attempting to disrupt; these are equity- and debt-based crowdfunding models. Crowdfunding has become an increasingly popular and successful fundraising method for the arts, video games and even some technology products in recent years (Srivastava, 2017)
1.2 Research Problem
Crowdfunding is expanding at a rapid pace. In Asia-Pacific region. Sri Lanka also exposes finance market to online alternative finance market. There was not any crowdfunding mechanism until 2016. Therefore, enough academic research did not happen. In the year 2016, the first Sri Lankan Crowdfunding system was established. Now sufficient time period has gone to study its status.
Cohen (2016) state, that the future for real estate crowdfunding holds the opportunity for significant growth, but also includes powerful risks. Hence the uncertainty gap between benefits and traps will widen due to lack of knowledge about that crowdfunding as a property investment vehicle will be the next best investment phenomenon.
1.3 Research Objectives
1.3.1 General Objective
The specific objective of this research focus to analyze the investor perspective on property crowdfunding as an investment vehicle in Sri Lanka.
1.3.2 Specific Objectives
To accomplish that object, study seeks to answer the following questions of property crowdfunding.
Ø To identify investor expectation based on their gender, age and investor type.
Ø To identify risk in property crowdfunding relate to their gender, age and investor type.
Ø To analyze level of financial knowledge, make crowdfunding investment as per their gender, age and investor type.
1.4 Significance of the Research
1.5 Limitation of the Study
1.6 Research Methodology
This study focuses on investors perspective on property crowdfunding. Through different research approaches, this study followed a combination of qualitative and quantitative research methods. Primary data will be collected by structured interview and survey-based questionnaire. As well as secondary data obtained by referring research article, books, reports, websites etc.
Specially information was gathered on following aspects.
Ø Demographic in particular gender, age and invest type.
Ø Investment history as well as return expectations of property crowdfunding.
Ø Risk perceptions and financial risk tolerance concerning a property crowdfunded investment
Ø Financial knowledge of the specific target group and how it influences their investment decision making process.
Collected data analyze done with the relevant analyzing tools such as SPSS, Excel.
The survey is mainly target at investors that have invested funds through a crowdfunding platform.
Listed investors in “crawdisland” onliline platform