Recent years are witnessing active discussions about crowd funding around the globe and movements to improve legislations related to it in many countries including the U.S.A. and the U.K. There is more and more interest in crowd funding in South Korea... Recent years are witnessing active discussions about crowd funding around the globe and movements to improve legislations related to it in many countries including the U.S.A. and the U.K. There is more and more interest in crowd funding in South Korea, as well. Financing is one of core drivers in corporate management. The systems and methods of financing have developed along with the development of times. Rapid advancements in IT technologies and resulting changes to the perceptions of people have brought huge waves of changes in corporate financing. Crowd funding based on the development of social networks in addition to IT technologies has recently attracted attention as a technique to propose new alternatives to corporations that are experiencing difficulties with financing. This study set out to analyze institutional problems with crowd funding by its types and propose its improvement measures and activation plans in non-institutional aspects, thus helping crowd funding settle down as a new financing mode for small- and medium-sized companies and make a contribution to the vitalization of national economy and job creation. The main findings were as follows: The study examined potential problems with crowd funding in the legal aspect according to the establishment of crowd funding market in its enlargement and operation and identified improvement measures accordingly. There were several problems with crowd funding in the institutional aspect including the poor legal systems in donation-, sponsorship-, and loan-type crowd funding and also restriction on advertising, limits on monopoly, complexity of investment procedures, limited amount of financing and lack of information on the part of agencies in securities-type crowd funding. Improvement measures to solve those problems were proposed along with activation plans for crowd funding in non-institutional aspects as follows: The study first proposed improvement measures in the institutional aspect including the revision of Donation Act, Electronic Transactions Act, and Loan Business Act, which contradict the right function of crowd funding. The improvement measures also covered the regulations of recently revised Capital Market Act that concerned restriction on advertising, limits on monopoly, and limited amount of investment in securities-type crowd funding. The study then proposed a couple of activation plans for crowd funding in non-institutional aspects as follows: First, the policy-making authorities should make efforts to increase the awareness of crowd funding through ongoing interest and promotions to ensure the settlement and success of crowd funding. Platform companies also need to reinforce their promotions to attract multiple investors. There are partial restrictions on the promotion of crowd funding due to the legal regulations, but those regulations are expected to be lifted. Secondly, both the central and local governments need to activate crowd funding through public-private joint projects. Local governments should establish a collaboration system for joint local tourism and experience projects in conjunction with the traditional markets, cooperatives, social enterprises, community-based businesses, and local companies through joint identification and support for projects linked to the activation of local economy. They also need to expand consulting supports so that cooperatives, social enterprises, and community-based businesses can expand their business and form a local network with crowd funding. The expansion of consulting supports demand that they should provide local social enterprises with information about the excellent cases and success factors of crowd funding on an ongoing basis. Finally, there is a need to search for activation strategies based on a competitive edge over other countries. Crowd funding began with donations through SNS and is gradually expanding into large-scale projects. Given that South Korea is in the leadership of mobile market, IT, and online games, it will be able to achieve success and creative economy through crowd funding by implementing various measures above in proper manners. The present study has its share of limitations including the difficulties with delving into the operational problems with crowd funding due to its short history. The study thus remained at the level of examining the legal problems mentioned in Capital Market Act and the practical problems discussed at work-site operations in previous studies. Those limitations can be overcome by visiting the participants of crowd funding including issuers, investors, and platform operators and conducting qualitative research with an interview about the activation and success factors of crowd funding in their shoes for the sake of crowd funding growth. It is also needed to conduct comparative research on the success and failure factors of crowd funding according to cultural differences in order to create crowd funding in overseas markets different from the domestic one. Future study should also investigate activation plans for crowd funding for start-ups and small- and medium-sized companies that have a difficult time with financing in the conventional financial world. In addition, there is a need for ongoing research on public-private cooperation plans as well as government-led institutional improvement measures and activation plans.
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