Crowdfunding
Crowdfunding is a method of raising capital through the collective effort of friends, family, customers, and individual investors. This approach taps into the collective efforts of a large pool of individuals—primarily online via social media and crowdfunding platforms—and leverages their networks for greater reach and exposure.
Pronunciation
Crowdfunding is pronounced as /ˈkroʊdˌfʌndɪŋ/.
Etymology
The term "crowdfunding" is a compound word derived from the words "crowd" and "funding". It was first coined in 2006 by Michael Sullivan, during the creation of the website fundavlog.
Related Terms
- Crowdsource
- Peer-to-peer lending
- Equity crowdfunding
- Reward-based crowdfunding
- Donation-based crowdfunding
Description
Crowdfunding is a form of Crowdsourcing and alternative finance. In 2015, over US$34 billion was raised worldwide by crowdfunding. It is a popular way to raise funds for a variety of new ventures and projects, including product development, scientific research, and community-based social initiatives.
Types of Crowdfunding
There are four main types of crowdfunding: Donation-based crowdfunding, Reward-based crowdfunding, Equity crowdfunding, and Debt crowdfunding or Peer-to-peer lending.
Platforms
Some of the most popular crowdfunding platforms include Kickstarter, Indiegogo, GoFundMe, and Patreon.
Legal and Regulatory Issues
In many countries, including the United States, crowdfunding is regulated by the government. These regulations are designed to protect investors from fraud.
See Also
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