💰Internet Crowdfunding

How It Works

Crowdfunding is essentially a technical term for something everyone has been used to in one way or the other in our communities and social networks, sometimes as charity fundraising or just friends helping friends.

The practice only became far more powerful when Internet technology expanded the scope, speed, and convenience of the process, heralding a new era of Internet-based Crowdfunding which typically involves:

• A Crowdfunding Platform (or website)

• An individual (or entity) who needs to raise money for something

• A campaign (description of what is needed using text, videos, or photos)

• Donors, who contribute money to the campaign

The individual goes to the platform and creates a campaign to let donors know what he wants to do and how much he needs. The platform makes it easy for the donors to contribute money and for the individual to collect the contributed money.

Types Of Internet Crowdfunding

There are 4 established models of Internet Crowdfunding:

1. Equity-Based:

The process through which any business can raise money from the general public (i.e., the 'crowd') in exchange for shares in that company

1. Rewards-Based:

Promises donors or investors that they will be rewarded with gifts or other non-monetary benefits for contributing to the campaign. For example, ‘if you contribute £10 you will receive a sample of our product or tickets/gifts’

1. Lending Based:

The practice of lending money to individuals or businesses through online platforms that match groups of lenders with a single borrower, also sometimes called P2P Lending

1. Donations Based:

In donation-based crowdfunding, people campaign to the general public for support or funding, and donors support or donate to the campaign without receiving anything in return other than the knowledge that they have contributed to a good cause.