Crowdfunding is a new method through which an individual can raise funds through anonline medium from a large number of people who can act as investors. Over the years the way crowdfunding is done has evolved. There are millions of domain which are now turning towards crowdfunding for raising funds. In this scenario, it becomes essential to know about the crowdfunding types and be clear about what are the features of the crowdfunding types.Different domain requires different
Different domain requires different crowd funding types and it is better to know beforehand about the crowdfunding types which is best suitable for that domain.
How the crowdfunding types differ from each other?
Nowadays, the different crowdfunding types are mostly shadowed by the term crowdfunding and most people don’t even know the difference between the crowdfunding types. There are four different crowdfunding types which have different features as well as benefits. It is essential to understand and comprehend the different requirements as well as features of the crowd funding types so that the most suitable crowd funding types can be chosen with respect to the goals and needs of an individual. These four
These four crowdfunding types possess different benefits and features for both the businessman as well as the investors of the campaign. The four basic crowd funding types are Equity-based crowdfunding, Donation-based crowdfunding, Debt-based crowdfunding and Reward-based crowdfunding.
The first one among the different crowdfunding types is the Equity-based crowdfunding. The Equity-based crowdfunding involves giving stakes or share in the business in return for the investment made by the contributors. It is mostly used for raising the funds to start a company or for its growth. The campaign for this crowdfunding types takes a long time sometimes even several months and involves businesses needing a lot of money.
The second one among the crowdfunding types is the Donation-based crowdfunding which involves people donating or contributing small amounts to a project. This crowdfunding typeis generally used by charities or non-profit organization who are trying to raise money for a cause. In this case, often the donors do not get anything in return for their contributions.
The next one out of the different crowdfunding types is Debt-based crowdfunding. This type of crowdfunding is also known as Lending-based crowdfunding. In this type of crowdfunding, the businessman or entrepreneur can gain monetary funds from an investor or lender in the form of a loan which needs to returned back to the lender after a particular time period.
This type is suitable for businesses or startups where the entrepreneurs don’t wish to share a stake or shares of the company. This type of crowdfunding also takes a very less amount of time and usually goes on for a month.
The last type of crowdfunding is Reward-Based crowdfunding in which the investors get some rewards or gift in return for their contributions. This type of crowdfunding is the most popular one as it is able to attract a lot of investors. Although, all the types of crowdfunding have their pros and cons, but it is essential to choose the type which is best suited for the campaign and use its features to make the campaign successful.