What is Crowdfunding

Crowdfunding is asking a crowd of people to donate a defined amount of money for a specific cause or project in exchange for various rewards.

There are three general categories crowdfunding can fall under: Equity, Donation, and Debt.

Equity-based crowdfunding is asking a crowd to donate to your business or project in exchange for equity.

Donation-based crowdfunding is asking a crowd to donate to your project in exchange for tangible, non-monetary rewards such as an ecard, t-shirt, pre-released CD, or the finished product.

Debt-based crowdfunding is asking a crowd to donate to your business or business project in exchange for financial return and/or interest at a future date.

The Good

  • Crowdfunding is useful for a variety of opportunities, whether fundraising for disaster-relief, creative projects, creating a salable product, or creating a start-up.
  • Crowdfunding platforms allow you to market your project, generate interest, and receive funds.
  • Crowdfunding backers can provide useful feedback about your project.
  • Once you get a solid base of support, there is no limit to the amount of projects you can fund.

The Bad

  • Crowdfunding your project exposes your ideas to potential copycats.
  • Crowdfunding platforms may limit the amount of funds you can receive.
  • Crowdfunding regulations and taxation can be difficult to work with.

The Excellent

  • Crowdfunding is not limited to certain kind of project, there is no discrimination! Only great ideas!
  • Crowdfunding can be fast, efficient, and effective if done right.
  • There can be little risk involved compared to other business ventures.
  • The more creativity and fun you have, the more likely you'll get funded.

Have experience crowdfunding? Please let us know how it goes!

Author: Casey Armstrong