What is crowdfunding and why is it so popular? One of the fastest growing online industries, crowdfunding is when individuals or startups use online platforms to gain funding for a project. Sounds impossibly easy right? It is. With 6,445,080 crowdfunding campaigns hosted and 34 billion dollars raised globally this past year, everyone and their cat are using this method to complete their projects and achieve their goals. Crowdfunding is an amazing way to finance your ideas and projects because, not only do you get upfront finance for your project without interest, you also get instant feedback as to whether your project has a potential audience or buyers
How does crowdfunding work? Usually, platforms allow anyone establish a monetary goal by setting up a pitch. This allows anyone to donate money to that project, either altruistically or if they have been promised a certain reward.
Thanks to the internet, crowdfunding has been able to reach millions of people, but it actually dates back to the 1700’s with modern day crowdfunding beginning in 1997 with British rock band Marillion raising 60 thousand dollars for a tour and has kept growing since then.
TYPES OF CROWDFUNDING
Crowdfunding sites vary in order to suit different needs. Here are the different types of crowdfunding:
• Debt-based: Contributors receive interest payment on their contributions. Examples of sites that provide this type of crowdfunding are: CROWDO, Moolah Sense, and Funded Here.
• Equity-based: Contributors receive shares in exchange for their contributions. Sites that provide this include: Angel list, Cap bridge, FUNDEL.
• Reward-based: Contributors are promised rewards in exchange for their support. For example, getting priority access to a restaurant that they funded. A site that provides this is Kickstarter.
Donations: These are altruistic donations and are usually tax deductible. Sites that provide this include: GoFundMe, YOUCARING and Friendfund.
With crowdfunding still growing strong and projected to grow over 300 billion dollars by 2025, it just might render other finance methods obsolete.
FUN CROWDFUNDING STATISTICS.
- Crowdfunding campaigns with videos earn 105% more than those without videos.
- 53% of Email shares, 12% of Facebook shares and 3% of Twitter shares of crowdfunding campaigns turn into donations.
- 79% more backers are added when you add personal information to your campaign.
- Campaigns that updated followers regularly raise 80% more than those with no updates.
- There were 6,455,080 worldwide crowdfunding campaigns last year.
- Crowdfunding campaigns that raise at least 30% of their goal within their first week are more likely to reach their goal.
- The average word count for successful crowdfunding campaigns is 300 to 500 words.
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