Crowdfunding is a process in which individuals pool money and other resources to fund projects initiated by other people or organizations. Crowdfunded projects may include creative works, products, nonprofit organizations, supporting entrepreneurship, businesses, or donations for a specific purpose (e.g., to pay for a medical procedure). Crowdfunding usually takes place via an online portal that handles the financial transactions involved, and may also provide services such as media hosting, social networking, and facilitating contact with contributors.
Video Comparison of crowdfunding services
Funding models
Crowdfunding is donation-based fundraising for businesses or creative projects, typically via an online funding portal. Some but not all crowdfunding projects offer contributors rewards, which may differ based on the amount of money donated. Rewards can include copies of a creative work, products created with the funding, special or personalized incentives (such as autographed works or promotional merchandise), or public recognition.
In equity crowdfunding, a crowdfunding approach is used to raise investment capital and contributors receive equity in the resulting business. Contributors may act as investors and receive shares directly, or the crowdfunding service may act as a nominated agent.
- Equity-based crowdfunding
- Reward-based crowdfunding
- Debt-based crowdfunding
- Litigation crowdfunding
- Donation-based crowdfunding
Equity-based crowdfunding: Equity-based funding is illegal in many countries, such as India. It is a joint effort made between individuals to support the causes of other people or organizations in the form of equity. This is legal in the United States, where it has mention in the 2012 legislation, which allows a pool of small investors to come together.
Reward-based crowdfunding: Also known as 'non-equity' funding, this form is used for funding campaigns like supporting a free development of software, promotion of motion pictures, aiding scientific research, development of inventions, etc. Those who found the type expect returns from the project.
Debt-based crowdfunding: This is known as 'Peer to Peer,' 'P2P,' 'marketplace lending,' and 'crowdlending.' Borrowers create campaigns to fulfill their financial needs, and lenders contribute toward the goal for an interest.
Litigation crowdfunding: The plaintiff reaches to fund a court case (usually under confidentiality). The plaintiff asks for donation money, or gives a reward in return. If the claimant wins, the investor may get more than his initial investment.
Donation-based Crowdfunding: The best example would be raising funds from individuals to support personal or social causes.
Maps Comparison of crowdfunding services
See also
- Peer-to-peer lending
- Equity crowdfunding
- Crowdsourcing
References
Source of article : Wikipedia
0 Comments