The practice of funding a project or venture by raising money from a large number of people who each contribute a relatively small amount, typically via the internet.
This modern crowdfunding model is generally based on three types of actors – the project initiator who proposes the idea or project be funded, individuals or groups who support the idea, and a moderating organization (the "platform") that bring the parties together to launch the idea.
Crowdfunding has been used to fund a wide range of for-profit, entrepreneurial ventures such as artistic and creative projects, medical expenses, travel, and community-oriented social entrepreneurship projects. Though crowdfunding has been suggested to be highly linked to sustainability, empirical validation has shown that sustainability plays only a fractional role in crowdfunding. Its use has also been criticized for funding quackery, incredibly costly, and fraudulent cancer treatments.
The Crowdfunding Centre's May 2014 report identified two primary types of crowdfunding.
Entrepreneurs pre-sell a product or service to launch a business concept
without incurring debt or sacrificing equity/shares.
The backer receives shares of a company, usually in its early stages, in exchange
for the money pledged.
Companies that Offer Crowdfunding Platforms
Following are the platforms which offer to crowdfund
How Much Do Crowdfunding Sites Charge?
Different crowdfunding sites charge different amounts. Make sure to read about all of the fees charged by the site before signing up. Sites will typically charge a fee for processing payments, ranging from 3% to 5% per transaction or a percentage of monthly income earned. Some sites might also require that a minimum amount be raised, or else the contributors get their money back, so make sure you'll be able to hit your target.
Which Crowdfunding Platforms Would Be Best?
How We Chose the Best Crowdfunding Sites
We reviewed the most popular crowdfunding sites to narrow them down to our top picks. We selected the best crowdfunding sites based on their features, track records, number of users, type of crowdfunding they offer, costs, and more.
There are ways that companies trying to get crowdfunding can advertise their opportunity to investors. Marketing channels play a vital role in implementing the organizational strategy. Inbound and outbound marketing are based on different methods. Inbound marketing uses blogs, webinars, socials, and paid ads to promote the product/service to a vast audience.
Outbound methods include TV/radio, cold-calling, events, and email marketing.
For the crowdfunding niche, inbound marketing channels work better; however, emailing is also an excellent way to build the client base.
Cox Business News staff Writer
Journalists from around the world writing to give you answers, with Assitant Editor Dr Muhammad Hassan Fayyaz for articles in June and July 2021
The Editor In Chief of Cox Business News