Research On Internal Control Of Crowd-funding Platforms

It’s a worldwide difficulty for small and medium enterprises to raise up funds, even if in America, which is the most advanced capital market, is not an exception. In recent years, crowd-funding, as a new financing model, firstly emerged in America to solve the fund-raising problems of small and medium enterprises, especially the startups. The Jumpstart OurBusiness Startups Act(known as the "JOBS Act") have certain terms to promote the development of crowd-funding. While for China, the fund-raising problems of the small and medium enterprises as well as the barriers for private capital frustrate domestic real economy. A creative finance method is needed to solve the problem.In recent years, crowd-funding boosted in China. Traditional financial institutions, local exchanges or Internet enterprises, science and technology parks all want to have a try in crowd-funding. Demohour and Angelcrunch are two representatives of the first few domestic platforms. They provide angel investment or bookings for products in the early stage. Apart from these platforms, many innovative coffee shops, VIP clubs take part in crowd-funding as well. Like P2P net credit, crowd-funding is in the process of "wild growing".Along with the prosperity of the market is the ignorance of risks and problems. If we neglect these risks and problems, they will bring the crowd-funding a deadly hit. A high default rate reflects an unprofessionalism of the fund-raisers. The transformation of Demohour is the microcosm for the recent development of Chinese crowd-funding market.This paper from the perspective of risk control to explore the internal control of the crowd-funding financing model, look for a way to alleviate the financing difficulties, which has an important practical significance. This paper mainly research how can internal control make contributions to a better development of the crowd-funding. That is, to ensure the efficiency and effect of operation, compliance of laws and a true and reliable disclosure, which can alleviate the asymmetry among the three parties and lead crowd-funding to a triple-win status.The paper is divided into five parts to do the research on the risk control of crowd-funding financing model, including:The first part is the introduction. Under the rapid development of Internet finance, domestic small and medium enterprises use a new financing model---crowd-funding. But due to its short history, there exist many risks and problems during operation. This paper does research from the angle of internal control. This part also introduces the background and significance of the topic, literature review, framework, research topics, insufficiency, innovation and so on.The second part is the theory of internal control and crowd-funding financing model. It mainly introduces the history, concepts and elements of internal control as well as the concepts, types, characteristics of crowd-funding, serving as a later exposition and analysis basis of the paper.The third part describes the situation and existing problems of domestic crowd-funding platforms through data compilation and analysis. From the prospective of the platforms, I analyze some relevant problems of the fund-raisers, platforms and investors. Taking Demohour as an example, I tried to form a deep interpretation of these situations and problems.The forth part introduces the development of crowd-funding in America. New rules were published in America to make the environment and the internal control of crowd-funding more formal. I took the case study of Kickstarter to illustrate how these rules made those improvements. By preparing international experiences, I tried to summarize some inspirations.In the fifth part, by combining Chinese special national conditions and many foreign experiences, I discuss how to promote the internal control system of crowd-funding and put forward some advices from the perspective of the principal and system of internal control, especially the most critical part---the platforms.