Crowdfunding

Crowdfunding is a method of raising funds for a project, venture, or cause by collecting small contributions from a large number of people, typically via an online platform and there are 4 types of crowdfunding :

Donation-Based Crowdfunding: In this model, contributors donate money to support a cause or project without expecting any financial returns. Donations are typically driven by the desire to support a social cause, charity, or community effort.

Reward-Based Crowdfunding: In reward-based crowdfunding, contributors receive non-financial incentives or rewards in exchange for their financial support. These rewards can vary depending on the project and can range from pre-ordering a product, receiving exclusive merchandise, or getting special access to events or experiences.

Equity Crowdfunding: Equity crowdfunding allows individuals to invest in early-stage companies or startups in exchange for equity ownership. Investors provide capital with the expectation of financial returns, typically through dividends or capital appreciation when the company succeeds.

Debt Crowdfunding: Also known as peer-to-peer lending or crowdlending, debt crowdfunding involves individuals lending money to borrowers, who can be individuals or businesses. Borrowers repay the loan with interest over a specific period, providing lenders with a return on their investment.

Although most businesses still prefer traditional loans due to the longer cycle and effort to clearly communicate the purpose, benefits, and impact of the project to motivate potential contributors - It has become increasingly popular in some regions in recent years.