When you are starting up your own business, or as an already successful company starting up a new project the question of how to finance the project is relevant. For most of the companies a bank loan or using your company’s equity is usually the simplest and most common solution. However, there can be situations where a third options could be useful.
Crowdfunding is a modern and innovative way of funding your projects. There are two primary types of crowdfunding. First one is reward-based crowdfunding where artists and entrepreneurs pre-sell a business concept without giving up shares. The second way is equity-based crowdfunding. That means the backer receives unlisted shares of a company, usually on its early stages. The first crowdfunding platform was ArtistShare, which was founded in 2003. After ArtistShare’s success more crowdfunding platforms followed. To date, there are over 450 crowdfunding platforms worldwide. In North America alone crowdfunding raised $1.6 billion in 2012 so it’s definitely a popular and successful way of financing your projects.
Business owners have many crowdfunding platforms to choose from. Kickstarter and Indiegogo are at the moment most popular donation-based crowdfunding-sites. On these sites, you can raise money as an entrepreneur to your latest projects or even ask for donations for your own hobbies and whatever else you could think of. It’s up to the individuals if they think your projects is worth their money. At the moment reward-based crowdfunding are at its peak, but is still mainly used for smaller projects and short-term start-up companies
More seriously-taken site for business-owners is crowdfunder.com, but it has not yet found the same hype and popularity that Kickstarter and Indiegogo have In the future crowdfunding.com can revolve in a way where it helps a larger crowd of investors to back companies for both profits and purpose. . In the future this and other similar sites can grow to become a top financial solution for companies. There is also a deferent potential for crowdfunding to become a mainstream way of financing a company and even shaping a new economy.