INTERNATIONAL JOURNAL OF LATEST TECHNOLOGY IN ENGINEERING,

MANAGEMENT & APPLIED SCIENCE (IJLTEMAS)

ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XV, Issue II, February 2026

Evolution and Impact of Crowd funding in India

Dr. Ram Niwas Sangwan, Mrs. Ekta Rani

Govt. College, Kharkhara (Rewari)

small financial contributions from a broad audience, collectively referred to as "the crowd," rather than soliciting

substantial amounts from a limited number of traditional investors such as banks or venture capitalists. Crowd

funding has gained significant traction across various sectors, including the arts, entrepreneurship, and scientific

research, owing to its accessibility and community-oriented nature. One of the primary advantages of crowd

funding is its capacity to democratize financial access. It offers opportunities for a diverse range of participants,

including novice creators and small-scale entrepreneurs, to present their ideas and obtain support without

substantial capital or recognition. Crowd funding manifests in various forms, each tailored to distinct needs.

Reward-based crowd funding involves supporters receiving non-financial incentives for their contributions,

which may include items such as thank-you notes or product prototypes. Equity crowd funding allows backers

to acquire shares in a company, thereby securing financial interest in its success. Donation-based crowd funding

makers.

Crowd funding represents one dimension of the phenomenon of crowd sourcing besides crowd voting and crowd

creation. The term crowd sourcing is composed of "crowd" and "outsourcing", pointing to the meaning to

outsource specific functions to a group of external persons. The concept is based on the idea of "wisdom of a

crowd". The act of taking a job traditionally performed by a designated agent (usually an employee) and

outsourcing it to an undefined, generally large of people in the form of an open call. Besides crowd sourcing,

crowd funding is closely connected to micro lending. Micro lending refers to the idea of funding of individuals,

who do not have access to conventional financing from credit institutions.

study finds the growing popularity of reward- and donation-based crowd funding in India, emphasizing the need

to balance investor protection with economic development through equity markets.

Maheswari and Kathirvel (2024) studied how well people in Coimbatore City, India, understand crowd funding

and conscious marketing. They found that many young adults were involved, with 67.2% aged 18-24, and 57.4%

INTERNATIONAL JOURNAL OF LATEST TECHNOLOGY IN ENGINEERING,

MANAGEMENT & APPLIED SCIENCE (IJLTEMAS)

ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XV, Issue II, February 2026

male. Most (54.1%) lived in cities, indicating that city residents know more about crowd funding. A large number

(95.1%) thought crowd funding could help new projects, and 39.96% found campaigns through social media.

However, trust issues stopped 37.74% from joining. The study shows that 93.4% believe that crowd funding

raises marketing awareness, especially for socially responsible projects. They used surveys and interviews with

60 people and analysed the data using percentage analysis, a Likert scale, and rank correlation. While city youth

rules, and RBI guidelines. Important platforms include Fundable, Kickstarter, Indiegogo, Wishberry, Ketto,

Catapoolt, and The Hot Start. This study predicts growth through campaigns, special platforms, company

partnerships, transparency, block-chain use, global funding, and reward based crowd funding. Challenges

include low awareness, infrastructure problems, following rules, investor protection, competition, low returns,

and execution issues. Crowd funding has potential in India, but is not fully used and needs better rule-following.

4

Agrawal and Jethy (2024) investigated crowd funding as a sustainable financing mechanism for Micro, Small,

and Medium Enterprises (MSMEs) in Odisha's Khurda district. This study assessed MSMEs' awareness of crowd

funding, examined adoption factors, and proposed recommendations to enhance adoption. Data were collected

using structured questionnaires and analysed using regression models through a survey of 385 MSMEs, selected

struggle to obtain traditional funding use online platforms to reach investors. This study examined different types

of crowd funding: reward-based, donation-based, loan-based, and equity crowd funding. Crowd funding helps

innovation by providing access to money, letting entrepreneurs test ideas, and building a community of

supporters. This study also examines how crowd funding works with venture capital and angel investments,

showing that it can work well together. Challenges include fraud risk, lack of information, and different

campaign results. The regulations are discussed as possible solutions. The study suggests further research on the

sustainability, impact on innovation, and success factors of crowd funded projects. While crowd funding is

promising for funding innovation, its potential and challenges need further study to help innovation and

economic growth.

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funding. It also mentions other options such as bank loans and venture capital. It ends by stressing the need to

pick the right funding for start-ups.

7

Significance of the study

Studying crowd funding in India is important because it affects business, money, and society. Crowd funding

helps entrepreneurs who cannot obtain money from banks. This makes finance more accessible, which can lead

to new ideas and more people participating in the economy.

Crowd funding can impact social inequality in India. Social media plays a significant role in raising money by

promoting campaigns and engaging networks. Crowd funding also boosts interest in products that are good for

society and shows changes in what people want to buy.

INTERNATIONAL JOURNAL OF LATEST TECHNOLOGY IN ENGINEERING,

MANAGEMENT & APPLIED SCIENCE (IJLTEMAS)

ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XV, Issue II, February 2026

Advantages of crowd funding in India

Crowd funding in India has numerous advantages, serving as a significant alternative funding mechanism,

capable of addressing diverse needs across various industries. The principal benefits associated with crowd

funding in the Indian context are as follows:

Easy access to collect capital: Crowd funding platforms enable entrepreneurs, particularly those operating small

businesses and startups, to secure financial resources by aggregating modest contributions from a large pool of

investors. This approach democratizes the fundraising process, which has traditionally depended on banks and

financial institutions.

Market validation: Crowd funding campaigns enhance the visibility of a project or business among prospective

users and investors. This process functions as a form of market validation, offering entrepreneurs valuable

projects eligible for funding, encompassing creative endeavours, social initiatives, and technological

innovations. This flexibility cultivates an environment that is conducive to creativity and innovation.

Transparency and trust: Block-chain-based platforms enhance transparency by enabling contributors to

monitor fund allocation and maintain control over their investments through the use of smart contracts. This

mechanism fosters trust among investors and encourages increased contributions.

Support social causes: Crowd funding has been effectively utilized to support social and medical causes,

providing a mechanism for individuals and groups to secure funding for healthcare and community initiatives.

Nevertheless, this practice often mirrors existing social inequalities, as marginalized groups may receive less

support compared to their more privileged counterparts.

Empowerment of entrepreneurs and investors: Crowd funding facilitates empowerment for both

Lack of Regulating Authority: The absence of a comprehensive regulatory framework poses a significant

challenge to crowd funding in India. The lack of explicit legal guidelines leads to uncertainty and hinders sector

INTERNATIONAL JOURNAL OF LATEST TECHNOLOGY IN ENGINEERING,

MANAGEMENT & APPLIED SCIENCE (IJLTEMAS)

ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XV, Issue II, February 2026

growth. In contrast to other countries, where crowd funding is governed by a structured set of regulations, the

Indian market continues to grapple with ambiguous legal pathways.

Lack of Trust: The absence of trust among potential investors is a considerable barrier. Crowd funding relies

heavily on the credibility of project creators and the transparency of their campaigns. In many instances, potential

backers in India may express uncertainty regarding the legitimacy of campaigns, partly because of previous

occurrences of fraud and fund misuse across various sectors.

Lack of Advance Platform: Numerous Indian crowd funding platforms lack the advanced functionalities

necessary to attract significant investor engagement. By contrast, international platforms offer sophisticated tools

and analytics to campaign creators and backers. Indian platforms frequently do not meet these standards, thereby

limiting their effectiveness and reach.

INTERNATIONAL JOURNAL OF LATEST TECHNOLOGY IN ENGINEERING,

MANAGEMENT & APPLIED SCIENCE (IJLTEMAS)

ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XV, Issue II, February 2026

INTERNATIONAL JOURNAL OF LATEST TECHNOLOGY IN ENGINEERING,

MANAGEMENT & APPLIED SCIENCE (IJLTEMAS)

ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XV, Issue II, February 2026

start up companies set up in 2016, which were decreased in 2017 to 23 i.e. a decrease of 23% from 2016 to 2017.

There was continuous increase from 2017 to 2019. In 2019, there was an increase of 35% as comparison of 2017.

After 2019 to 2025, there was continuously decrease in set up of crowd funding companies. This decreasing

trend may be due to the role of govt. regulation and India’s broader digital ecosystem developments such as UPI

expansion and fintech growth.

2024;12(7):1-13.

8.

https://tracxn.com/d/explore/crowdfunding-startups-in-india/__ABrMhoEzxPWFqerZBq-

hs3JePShZms5H4F4kHKBnRRk#about