Crowdfunding is basically collecting a little amount of money from a crowd as the name says. This amount is used for a project to be started. This process is especially for those who are going to start a new business or project and do not have strong financial support. 

Moreover, even musicians, artists, entrepreneurs, artists, and filmmakers also use these funds for their startups. How many online sites are also established where one can easily do crowdfunding. The only thing that you can do is to make a page over these sites, where you can use marketing techniques to gain funds. You can use campaigns to circulate your idea and product fastly. Here is a complete guide about crowdfunding.

Types of crowdfunding

1. Reward-based crowdfunding

This is a type of fundings where funders offer rewards to those who invest their money or funds. In this way, people get interested in investing in your project. As a reward, you can give any package or benefit in return for their support and money. 

You can provide rewards of different types. For example, a certain type of reward for a certain amount and another reward for the other amount. In this way, different funders will provide different amounts of funds to appeal the different awards. This technique allows the funders to maximize the amount according to their ease. 

2. Equity-Based Crowdfunding

In this type of funding, the funders or investors become part of the project as the owner. For example, when the funder gets a part of the company in return for his investment. So, now the investor will share everything with the owners. He will be your partner in both the rewards and risks. But if the funder wants to sell his share then he can do that. You can not prohibit him from doing that. 

3. Donation-Based Crowdfunding

In the former, we define the way of funding where the funders receive some kind of reward or a part of the company in return for their investment. But in donation-based crowdfunding, the investors give funds for free. They give donations of their own will. G2C crowdfunding donation is a good example.This kind of funding is used for good causes, like welfare, charity, and etcetera. For example, when funds are collected to help the people who lost their properties in floods or another natural disaster. Go fund me and just giving are online sites for donation-based fundings. 

4. Peer to peer lending

Lending Club and prosper are the online sites for peer-to-peer lending crowdfunding sites. Where people take money outside of traditional bank loans. Moreover, lenders also take advantage of peer-to-peer lending. Some people build portfolios of loans at their risk. And frequently pays more interest than banks.

Advantages of Crowdfunding

The value of crowdfunding is increasing day by day. It’s being more effective and valuable. The number of crowd funders and investors is also increasing. Crowd funders have different platforms where investors come to support and invest money. Also, social media helps you to easily spread your words to more people in a short time. 

Evenmore, your friends can also share your ideas. You can use the funds that you get from crowdfunding for starting your business when you don’t have good financial support. Hence there is less financial risk, so you can easily start a new business or project.  

Conclusion 

In a nutshell, crowdfunding is a process where the beginners collect funds for their projects and businesses. One can also collect  Funds to help the people who lose their properties in floods. Supporters provide their support in the form of money and crowdfunders receive that money.