2 minutes to learn about Crowdfunding

What is Crowdfunding?

Crowdfunding is a coined term, merging the words “crowd” and “funding”, and it is a platform where through the connection of the internet it allows an individual or a group of them to ask for assistance or to achieve dreams by allowing contributions in the form of funds from other individuals who are willing to help.

This platform caters for the smallest of projects like medical fees for a friend or a loved one, traveling to a country one’s yearning for, or paying fees for overseas study to large-scale projects like economic assistance for a developing country, development of a product, or the publishing of one’s own work like art and the funds needed for a project may vary from just a mere hundred dollars to tens of thousands of dollars.

What is crowdfunding?

There are 4 types of crowdfunding

  1. Donation-type: All the funds collected will be donated to the project owner, and no returns are expected from the donors
  2. Equity-type: The donors will receive a form of return from the benefits of the project, similar to an investment
  3. Debt-type: The donors will receive a return in the form of interest from the project owner
  4. Reward-type: The donors will receive a return in the form of a product or service from the project owne
  • The growing marketplace for crowdfunding

According to the estimation of the world bank, the market of crowdfunding which is valued around 34.4 Billion dollars on 2015 will expand to 90 Billion dollars by the year 2020.

  • Advantages to crowdfunding

Crowdfunding allows for a wide scale donation and financing, so it is possible to economically achieve your dreams or goals using the platform.
For example, it is now more sound for an individual to gather donations from a person whom they are not acquaintances with.

Even with the debt-type or equity-type crowdfunding, business individuals who have insufficient capitals before will now have a chance financially to gather more investors to start their business.

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