Equity crowdfunding: the obstacles of the national regulation in Latvia

Abstract

Crowdfunding is rather new, innovative and, since the global crises of 2008, a rapidly growing alternative financing instrument. As part of FinTech, it is a result of the interdisciplinary interaction of technology, economics, and society. Crowdfunding is an alternative way to acquire financing for business projects by raising money from many people via Internet platforms. Usually, there are three parties involved – fundraiser (company or business project), fund providers (investors or so-called crowd) and crowdfunding service platform (middleman), that connects fundraisers to fund providers. Innovation comes first, regulation follows afterwards and sometimes the regulation fails to reach its goals. Therefore, the national legal obstacles to Equity crowdfunding in Latvia are discussed in the master’s thesis. As the name Equity crowdfunding suggests, investors receive company ownership in exchange for their financial contribution. The author's interest in this alternative financing model is to investigate how the legal framework affects the availability of equity crowdfunding service platforms in a small and open economy such as Latvia.