THE COST OF CROWDFUNDING CAPITAL

The main objective of this article is estimation the cost of capital raised from crowdfunding. I have drawn on the previous research in this subject and the published models of calculating the cost of traditional sources of capital. Through the assessment and appropriate modifications of these models I obtained certain formulas for quantification of the cost of capital raised from crowdfunding. Although the conventional sources of capital seem to be cheaper and sometimes easier to raise, they have many limitations to be used, especially for SMEs, early-stage enterprises or risk taking innovators. In view of the above, crowdfunding appears as a real alternative, but the knowledge about the cost of this type of capital is one of the most desired factors necessary to take a rational and effective investment decision.