Real estate crowdfunding: potential in Latvia

Abstract

Currently the economic environment is changing rapidly. The millennium’s development phase was followed by global financial crisis, which has changed the rules of game for all financial players and made others’ think outside the box. After the economic crisis people started losing trust in traditional financial institutions like banks, where all the processes are still very bureaucratic. Overregulated bank lending system could not satisfy the credit demand of small to medium size enterprises, thus triggering the need for a new, innovative financing model to fill the gap. At the same time, the communication afforded by Internet and information technologies opened up new opportunities. Taking advantage of such situation, the development of alternative financial sources like crowdfunding became notable. The purpose of this thesis is to investigate the effects of Latvian regulator approach on real estate crowdfunding services. The case study of three real estate crowdfunding platforms from the Baltics serves as an evaluation of the sector development in Latvia and Estonia.