Along with the strong growth of the internet, starting crowdfunding has become more popular. And especially in recent years, the concept and type of crowdfunding have become more popular and known by many people.
Crowdfunding is a term that is becoming more and more familiar and popular, especially in the business environment, with more and more startup projects. So what is crowdfunding? How many types of crowdfunding? And how to get your project to get crowdfunding. Startupsbasics will help you understand!
1. What is crowdfunding?
Crowdfunding is a form of calling for help from the community to help a project owner or an idea person to complete their project or product when they do not have enough capital to implement the project.
Just to give a sense of magnitude, when you have an idea about a solution or a project that benefits the community but you have no capital, no collateral to borrow a bank loan to implement the project, you want to meet people, present ideas, and call for financial support from the community for you to realize your project. This form of fundraising is called the type of crowdfunding.
Type of crowdfunding brings many benefits to Startups. You can raise capital for the product launch, allowing the product to contact the community and potential customers directly.
Type of crowdfunding is also easier than convincing big investors because project contributors are a marketing channel to introduce the following contributors and introduce them to users when the product is launched
Read more: What are investors? How many types of investment?
2. Type of Crowdfunding
2.1. Fundraising from the community
Fundraising from the community is a type of crowdfunding where the part receiving the funding may have little or no value to the donors. With this type of crowdfunding, people can completely support cash or in-kind, help with campaigns, spread about the media, or keep a policy.
2.2.Capital Contribution
Hình thức góp vốn cho vay phù hợp với các công ty đã thành lập. Những công ty này muốn phát triển một dự án mới nhưng lại không đủ nguồn lực tài chính. Họ Capital Contribution is suitable for established companies.
These companies want to develop a new project but do not have enough financial resources. Nor can they convince banks to lend them money. At that time, these companies will use this type of crowdfunding to reach out to the community and raise capital.
2.3. Crowdfunding based on equity
This is a type of crowdfunding based on the available capital of the project owners or a specific individual or company.This crowdfunding is widely applied in some cases of companies, organizations, and enterprises that want to sell their shares or ownership rights to members who have donated according to a certain percentage.
2.4. Crowdfunding based on community rewards
This is the form in which the organizations and individuals that donate and support may expect a particular reward from the capital donation depending on the amount of money or in-kind they have invested.
3. Benefits of investors for crowdfunding
Many crowdfunding projects have a reward-based mechanism where investors get to participate in launching a new product or receive a gift for their investment.
For example, the maker of a new soap made from bacon grease can send the product to each of its investors free of charge. Video games are popular crowdfunding ventures for gamers, who often receive early game mockups as a reward.
Equity-based crowdfunding is growing in popularity as it allows startups to raise money without giving up control to VC investors
There above is all information about Crowdfunding and types of Crowdfunding. We hope this article will be helpful to you as you learn about these concepts.
Read more: Opportunities and challenges of Business Technology
