Crowdfunding is a new concept that has massively grown in popularity. It’s a way to raise funds for personal needs, general funding and businesses can even use it for funding or to raise money. It’s a way to raise monetary contributions to fund a project from a large number of people online. Many people started using it as a way to help raise funds for funeral expenses and medical emergencies but today, people are finding other ways to use the concept to their advantage. Raising funds from two or more people over the internet to support a project, service, cause, investment or experience is the concept behind crowdfunding and here is a look at how it works.
How Crowdfunding Works
The model of crowdfunding consists of three parts. First, a person, group or business initiates an idea that needs funded. From there, individuals or a group of people need to support the idea and an organization needs to bring the parties together to launch the concept. Crowdfunding was born from this idea and has grown to be a $5.1 billion worldwide industry.
The crowd consists of individuals that are interested in contributing to the cause. The input of these individuals triggers the process and influences the outcome of the process. This gives people the opportunity to play a role towards providing help on a project. The crowd is motivated by the feeling of being responsible in part for the success of another’s cause.
Types of Crowdfunds
There are different types of crowdfunding that have emerged. Rewards crowdfunding is the most common type available in which a reward corresponds to a pledge amount. Equity crowdfunding works, too, in which you can exchange actual shares in a private company for capital. Donation crowdfunding is one in which you can donate without the expectation of anything in return. Lending crowdfunding is one in which entrepreneurs can raise fast cash in a type of loan intended to be paid back to the lenders in a pre-determined timeframe.
Crowdfunding sites have expanded and you can find sites set up for donations for various reasons including expensive medical care, funeral costs, fundraising for religious organizations and even travel expenses. There are sites that help crowdfund for struggling entrepreneurs, student loan refinancing and raising capital for small businesses.
Where Can I Join A Crowdfund?
While crowdfunding came into the spotlight as a way to raise donations for someone in need, businesses are finding this to be a useful option for keeping their businesses running. Eureeca.com is the perfect site for small or medium sized businesses needing help raising funds from a crowd in exchange for equity. They provide the online platform to make this happen and they are the first global crowd investing marketplace. Businesses can apply to have their funding proposals listed, set a funding goal and once they are approved, the business gets 90 days to raise their target funds.
There are also websites specifically set up for personal and general crowdfunds. One of the most common sites is www.gofundme.com in which you can raise money for great causes. You’ll see people needing funds for medical needs, those needing money to volunteer abroad and even those needing funding for their pet’s medical expenses. I’ve seen this firsthand with a campaign my sister’s friend put up for here here.
Some people are using sites like Kickstarter to fund creative projects related to music, art, games, films and technology. Crowdrise is another one that can help people raise money for charitable causes.
Crowdfunding is a great way to raise money quickly for a good cause, or a business, in which donations and investments can be done right online in an easy, quick and honest format.