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Types of Crowdfunding

Credit Suite - Monday, August 08, 2016

Crowdfunding is the collection of finance from backers—the "crowd"—to fund an initiative and usually occurs on the Internet platforms, also known as crowd financing and crowd sourced capital. There are many different types of Crowdfunding available today. Knowing these different types will help you choose the right type of Crowdfunding for your project helping you obtain the maximum amount of funding. 

Donation-based Crowdfunding, in which the backers essentially donate money to support a cause. Sometimes he/she may receive in exchange a "thank you", a special mention, or even a gadget, but in any case the pledge is essentially a gift.

Reward-based Crowdfunding, in which the backer receives a reward with a clear monetary value in exchange of the pledge. The reward is often a product or a pre-series item that the backer helped produce by pledging money. In this case the money pledged is similar to paying for a pre-order of a product or service

Credit-based Crowdfunding (more commonly called Peer-to-peer lending or "Crowd-lending"), in which the backer lends the money and receives an interest rate in exchange. In this case the money is pledged in the form of a credit loan.

Equity-based Crowdfunding, in which the backer receives shares of a company in exchange of the money pledged. In this case the money is pledged in the form of risk capital. Crowdfunding as a service, which allows high traffic brands and publishers to leverage their own traffic and Crowdfund right on their site.

As of 2012, there were over 450 Crowdfunding platforms. There are fundamental differences in the services provided by many Crowdfunding platforms. 

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Articles and Information for your Credit Journey
Articles and Information for your Credit Journey
Articles and Information for your Credit Journey
Articles and Information for your Credit Journey
Articles and Information for your Credit Journey
Articles and Information for your Credit Journey
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