What Is Crowdfunding? The Best Crowdfunding Websites

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Crowdfunding is a great and innovative way to acquire some financing, if another conventional ways of fundraising like loans, equity financing, venture capital are not available, or not suitable.



What Is It

Imagine that you have a great business idea, you truly believe in. But no bank or institution wants to finance your venture, because  of lack of business experience, your project is too risky, you can’t secure the loan, or whatever else. What should you do? Your idea is really good, and to leave it would be the worst decision! Well, you can try crowdfunding… This is exactly how Jessica Mae Stover financed her movie. She wanted to produce a sci-fi film called “Arthemis Ethernal”, but didn’t have the money for this. So she offered parts of the project to the broad public. Everyone from around the world was able to participate in the venture and get a part of the profits in exchange of a small donation, starting from $1 to $100. This is how Jessica managed to get a big part of the needed $150 000 for her production. Here is her site, the site of the WINGMEN-  http://artemiseternal.com/, where you can participate in some of her new projects, financed by crowdfunding.

What Is Crowdfunding, pic: scx.hu

Crowdfunding was the option chosen by the producers of “The Cosmonaut”, movie. In less than a week, they managed to collect more than 130 000 British pounds and save the project.

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This is what Andy White did, too in 1999! He wanted to create a trade association for freelancers in the UK. He needed 100 000 pounds, so he announced that 2000 people wold be able to get a share in the project for 50 pounds. Just 5 days later, he managed to collect ?100 100  and start “The Professional Contractors Group”.

Types

Generally there are two major types of crowdfunding  – donation based and equity based.

The donation based form of it, the supporter give money to an idea they like, without expecting anything in exchange. This is the more popular form of crowdfunding and it is not actually different from a donation.

The second type (equity based) is a from of investing, in which the supporter/investor actually buys a stake in the company with her money. It is less spread, because of some law limitations and the fact that the donation here are usually larger tan a dollar or two. This type is just like buying shares from a company, the difference here is that these shares are not regulated by a financial institution, nor they are traded on a stock exchange.



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