Crowdfunding is a means for businesses, charities, people, and other organizations to raise money. It is the practice of funding a particular project by raising small amounts from a large number of persons. This is typically done through the internet
How does Crowdfunding Works
Over the years crowdfunding platforms have grown s popular and are making the rounds. There are lots of crowdfunding platforms in the world today. You can directly and easily donate or invest in businesses and organizations or projects via these platforms.in these platforms, you should be able to see the overview of various projects being pitched.
To donate or invest, you may be required to register with these platforms. When you find a project that you want to invest in or donate to, you will need to look for more details.
In these campaigns, you will see the following;
- How much the said campaign wants to raise,
- How much it has raised so far,
- The share in the business offered,
- The purpose of the campaign,
- How long the pitch is open,
- How many people have invested in the campaign and many other relevant pieces of information
Types of Crowdfunding
There are various types and they vary from each other. The types of crowdfunding include;
- Loan-based. This is the type is where you lend money to individuals or businesses and in return for a specific interest rate. This is also referred o as peer-to-peer or peer-to-business lending.
- Investment-based. This is when you invest in a company and receive a stake in the company in return.
- Reward-based. This is when you get a reward for your investment in the project you are supporting.
- Donation-based. This is where you donate to a charity or a person.