What Is Crowdfunding?
Crowdfunding is a method of raising funds for projects and businesses. It allows fundraisers to collect money from a large number of individuals through various online platforms. Crowdfunding is a technology-enabled financial service that provides alternative ways to raise capital. Instead of relying on traditional funding sources such as banks or mutual funds, funds are sourced from a crowd of investors through online crowdfunding platforms.
The benefits received by individuals participating in crowdfunding campaigns depend on the specific crowdfunding model utilized. They may receive either tangible or intangible rewards as compensation for their investment. In certain cases, funds are provided as donations. There are two primary types of crowdfunding: investment crowdfunding and non-investment crowdfunding. Investment crowdfunding encompasses debt-based and equity-based models, while non-investment crowdfunding includes reward-based and donation-based models.
Crowdfunding can be classified into various models based on the rights granted to funders in the particular project. It involves a large number of funders and an online platform that facilitates and promotes communication between fund providers and those seeking capital. There is an open invitation for participation in the financing process.
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