COVID-19: We ask for your understanding as you may experience delivery delays. Learn More
Fiji Island Financial Monetary Authority
entrance Apply for License

What is the Crowdfunding

Crowdfunding refers to a fundraising strategy that aims to raise funds from the general public for a business or personal project. Crowdfunding usually conducted via a website and while various models currently exist, only a few models are regulated by the FFMA.

Non-Regulated Crowdfunding includes both the donation and reward models. The Donation Model simply is an open forum asking people to donate money to any cause under the sun. The Reward Model allows people do donate and receive prizes like TVs, vacations and so forth.

Regulated Crowdfunding includes loan and investment models. The Loan Model allows people to lend money and get back interest on their loan, while the capital is paid off over time. The Investment Model allows for people to invest in a business and receive shares and other benefits in return.

What are the benefits and risks?

Benefits in Crowdfunding

Because crowdfunding is conducted via the internet and utilizes social networking it is very tempting and seemingly easy for people to raise large amounts of money; in addition, due to the peer-pressure affect many people might donate or pay to join these types of campaigns.

Crowdfunding is also a way for business and individuals to obtain funds that they would not be able to obtain at the bank or via a different lender. Thus crowdfunding can be a powerful source for a local economy.

Risk in Crowdfunding

There are many risks involved in partaking in a crowdfunding venture.

  • - Under FFMA regulations, there is no obligation for financial compensation under FFMA regulations.
  • - Unless a contract is signed , there is no guarantee of timely payouts in the event of a successful venture.
  • - The Loan Model is extremely high risk and is not recommended as the overwhelming majority of investors lose all or most their money.

The Loan Model has proven to be extremely high risk, please pay attention the following detail.

  • - Most startups fail and investors lose everything they invest.
  • - If there is fraud or where the company invested in defaults will mean that your capital, dividend or premium will not be repaid.
  • - It is unlikely that dividends will translate into payments; usually startups have to undergo many rounds of funding and must issue many more shares thus lowering the value.
  • - Even if the startup is successful, you may have to wait a long time to get payment. It can take a long time for the startup to generate a real income.

Protecting yourself when Crowdsharing

  • - Check the business you want to invest in and ask all relevant questions.
  • - Understand that you will be exposed to high level of risk.
  • - In the case of profit take into account taxes, charges and defaults.
Contact information:
Copyright © 2020 Financial monetary authority
Fiji Island Financial Monetary Authority

Login account

Forgot password

Remember your password? Log in
Contact us