Crowdfunding as a Mechanism for Financing Small and Medium-Sized Enterprises

The implementation of an innovative idea by small and medium-sized enterprises often is difficult because of the difficulty in finding a source of financing. The modern level of development of communication technology, exchange of information, the possibility of combining these potentials and using synergistic initiatives provides an opportunity to overcome this barrier. Dynamically growing crowdfunding is an opportunity for implemented projects. This study presents a definition of crowdfunding, its types as well as advantages and disadvantages from lender and loaner of capital points of view. It also shows the dynamics of crowdfunding market growth in Europe and the legal basics. The aim of the article is to describe the characteristics of crowdfunding, attempt of identification of the key factors determining its allocative efficiency, and to present their impact on its further development.