MP Bayramov: Crowdfunding becomes one of key tools for mass investment

Crowdfunding is increasingly becoming one of the main tools for attracting mass investment worldwide, Azerbaijani MP Vugar Bayramov stated during today's meeting of Milli Majlis's Committee for Economic Policy, Industries and Enterprising, while discussing the draft law on Crowdfunding and amendments to several other laws, Report informs.

"Although different figures are given regarding the value of the global crowdfunding market, it is estimated to exceed $20 billion. Platforms that attract investment mainly on a P2P basis finance global and regional projects. Traditional reward-based and donation campaigns account for about 1% of global capital. Crowdfunding methods include equity-based, debt-based, blockchain-based, and others. Globally, the end-users of crowdfunding are considered startups, NGOs, and individuals. However, the draft law we are discussing is directly aimed at economic actors, especially startups, micro, small, and medium enterprises. In other words, some beneficiaries envisaged in the traditional philosophy of crowdfunding, such as NGOs and individuals, are not specifically mentioned in the law's objectives," Bayramov said.

He emphasized that in most developed countries, crowdfunding activities are regulated not by special laws but by acts or rules:

"This means that serious institutionalization is not carried out. In the draft law under discussion, however, special rules and the creation of a registry system are proposed. In fact, the philosophy of crowdfunding is to attract investment or donations from more citizens through simpler methods. The activity of operators is a very important aspect of this process. Globally, active platforms such as GoFundMe and Kickstarter have already been established. According to the draft, the charter and aggregate capital of an operator must not be less than the minimum amount determined by the Central Bank of Azerbaijan (CBA). The rules for forming charter capital, calculating aggregate capital, and defining its structure and composition will be set by the CBA. It would be more appropriate if the draft law specified concrete criteria for charter capital formation and aggregate capital amounts, so that rules are prepared based on those indicators."