The Study Of Comparative Advantages Between Equity Crowdfunding And Traditional Equity Financing

With the development of the society in recent years, the traditional way of financing is becoming more and more shortage of supply, which make the huge funding needs of real economy can not be satisfied. At the same time, crowdfunding, as a kind of emerging internet financial mood, has showed an accelerating development trend in our country, and has been considered an important way to solve the problem of micro and start-up, small and medium enterprises financing difficulties. Among them, equity crowdfunding is one of the most popular one and gets more attention. With the help of the internet to run the financing, equity crowdfunding become a huge challenge to the traditional equity financing. In the aspects of financing cost, financing speed, capital source and the assess mechanism and so on, equity crowdfunding has showed obvious advantages. In this sense, equity crowdfunding is essentially a more democratic and more popular financing way. On this basis, put forward in this paper, which will comparing with the equity crowdfunding and traditional equity financing, analyzing its advantages and disadvantages, thus to give some guidance for the enterprise financing. Also, we hope the equity crowdfunding can foster strengths and avoid weaknesses in the process of development, promoting itself get a long-term development.This paper mainly adopts the method of comparative study. First of all, according to the main factors influencing the financing ways choice, we establish a framework, and explain the reason for selecting these aspects. Then, the comparison of equity crowdfunding and traditional equity financing will be analyzed under the established framework and get a preliminary conclusion. Next, a simple case will be a supplement analysis to makes the article more full and supports the conclusion. Finally, according to the above discussion to get conclusions, and put some suggestions for the enterprise financing way choice and the further development of equity crowdfunding.Through the comparison of equity crowdfunding and traditional equity financing in financing cost, financing speed, degree of capital source widely, access mechanism and national policy, the signal transmission, and the risk and regulation, we can believe that equity crowdfunding has obvious advantages in financing cost, financing speed, capital sources and market access, which shows significant meaning for the small and medium-sized and start-up enterprises to get capital. Therefore, equity crowdfunding is a attractive financing way for these enterprises. In addition, equity crowdfunding sets fewer restrictions to investors, so it also is one of the important channel to solve the folk capital investment. While, traditional equity financing can deliver obvious positive signals to the market, and has the perfect laws restricted and regulation mechanism, so the companies which have large scale and good benefits usually prefer the traditional equity financing method. Of course, because the equity crowdfunding is a new financing way, in the domestic use is still immature, and the laws and regulatory measures are not in place, so there are lots of risks in practice. These risks are not only profitability, returns and capital withdrawal, but also intellectual property rights, illegal fund-raising and other legal aspects. If enterprise want to use equity crowdfunding to raise capital, not only need the project itself has the value and feasibility, but also need the improvement of the national laws and regulations, thus to protect the rights and interests of the participants are not be violated. But anyway, equity crowdfunding in our country’s development has attracted more and more widely attention. It provides a good flow for the private capital, and because the small and medium-sized companies have a large numbers in our country, they all need a kind of financing way to solve its financing difficulties, so the equity crowdfunding in our country has a relatively bright development prospect.This article writing from the perspective of main factors considered when enterprise choice the financing way, summarizing the existing research, illustrating why equity crowdfunding become a great way to help the small, medium and start-up enterprises raising capital, thus enrich the theory research about the comparison of traditional equity financing and equity crowdfunding.