New Forms of Funding Investment Projects and Companies: Crowdfunding and ICO

The article aims to study crowdfunding and Initial Coin Offering (ICO) – the new sources of raising capital for investment projects and business operations. Crowdfunding and ICO are compared to the Initial Public Offering (IPO), i.e. a traditional form of funding for corporations. The paper discusses new trends in finance. It explores the principles, features, legal regulations, advantages and disadvantages of innovative methods of funding. The analysis reveals that in the digital era of network economy there is a need to quickly raise considerable amounts of capital from many investors in funding rounds not burdened with complicated regulations. ICO and crowdfunding give such an opportunity, but at the expense of higher legal, financial and operational risks. Therefore, for mature companies, a less risky option is to get funded in a more traditional way, for example through an initial public offering which, although costlier and lengthy, has higher credibility and is under prudential supervision.