Crowdfunding is a way of raising finance asking a large number of people each for a small amount of money. Until recently, financing a business, project or venture involved asking a few people for large sums of money. Crowdfunding switches this idea around, using the internet to talk to thousands – if not millions – of potential funders. Typically, those seeking funds will set up a profile of their project on a website. They can then use social media, alongside traditional networks of friends, family and work acquaintances, to raise money. There are three different types of crowdfunding: donation, debt and equity.
Crowdfunding platforms bring together an individual or entity in need of funding with community members willing to contribute cash. Although pessimists find it inexplicable, it has been consistently demonstrated that people worldwide have a philanthropic nature when it comes to causes in which they believe – whether that’s an entrepreneurial product or service, disaster relief, an artist’s vision or something else entirely.
Through crowdfunding, new technologies are developed. Artists create films, music and art. Developers design new games. Disaster relief is empowered with an influx of cash.