Crowdfunding (international trade law) (Ro: finanțare participativă) = the practice of funding a venture or project by raising relatively small amounts of money from a large number of people usually through an online platform. It is a practice mostly used for financially supporting a cause or a start-up or for funding small and medium enterprises. This kind of activity is usually done either in exchange of a reward or at least the reimbursement of the investment, or without a demand for such reward. It can be used for financially supporting a litigation process, representing a mix between litigation crowdfunding and third party litigation funding. The novelty of this practice is the online factor.

There are multiple forms of crowdfunding:

  1. for projects where no reward is sought after – non-investment-based model: donation-based crowdfunding, e.g. donations for charities, for social events, sponsorships for artistic or cultural purposes and so on or reward-based crowdfunding: certain rewards are possible, yet these are not of financial nature or considerably of lesser value than the invested amount of money;
  2. for projects where investors have an interest of gaining profit or a financial reward: crowdlending/debt crowdfunding and equity crowdfunding.

There are several advantages of using crowdfunding as a source of finance:

  1. it is a fast way of raising finance without upfront fees;
  2. proposing a project or business using an online platform can be a valuable form of marketing;
  3. it doesn’t limit the access to conventional sources of finance as banks, but it can be a valuable alternative;
  4. it is open for people who can invest with small amounts of money that could determine profit if the project is successful;
  5. sharing the idea online can attract feedback and expert guidance on how to improve it;
  6. investors can track the initiator’s progress and promote it through their networks;
  7. can be beneficial to ideas that initially may not appeal to conventional investors.

Crowdfunding is not without risks or disadvantages:

  1. the idea of a project or business must be publicly shared in order to be financed and therefore it is not protected and can easily be copied by other users;
  2. the inexperienced initiator may underestimate the costs and gain insufficient resources for putting the idea into practice;
  3. the online platforms require reaching a certain funding target for the initiators to receive the funding, otherwise any pledged finance will be returned to the investors;
  4. failed projects risk damaging the reputation of the business and so on.


Useful links:

Legislation – Proposal for a Regulation of the European Parliament and of the Council on European Crowdfunding Service Providers (ECSP) for Business – not adopted [English] - Crowdfund Act H.R. 3606 of the United States of America [English]



Boyer K., Chevalier A., Léger J.-Y., Sannajust A., Le crowdfunding, Éditions La Découverte, Paris, 2016 [French]

Ungureanu C.T., Dreptul comerțului internațional, Ed. Hamangiu, București, 2018 [Romanian]


Online Publications

Agrawal A.K., Catalini C., Goldfarb A., The Geography of Crowdfunding, Working Paper 16820, National Bureau of Economic Research, Cambridge MA, 2011, retrieved from [English]

Agrawal A.K., Catalini C., Goldfarb A., Some Simple Economics of Crowdfunding, NBER Working Paper No. 19133, June 2013, retrieved from [English]

Ilucă D.M., Simion A.C., Platformele de crowdfunding la granița dintre securitate și fraudă/ Crowdfunding platformes at the border between security and fraud, in Analele Științifice ale Universității „Alexandru Ioan Cuza” Iași, Științe Juridice, Tomul LXIV, 2018, Supliment, retrieved from  [Romanian]


Practical use

European Commission, Commission Staff Working Document – Crowdfunding in the EU Capital Markets Union, SWD(2016) 154 final, Brussels 2016 [English] - European Securities and Markets Authority, Q&A - Investment-based crowdfunding: money laundering/terrorist financing, ESMA/2015/1005 [English]


by Andreea Șerban