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About CrowdFunding

CrowdFunding is one of top talks... The fact that you visited the platform ideaFunder$ shows that you are also interested in this topic.

 

What is CrowdFunding?

Crowdfunding is an alternative way of financing ideas and projects. It is based on the principle of gathering a group of individuals who support the realization of an idea or project with their voluntary contributions. The mechanism of group financing within the local community was mentioned in the eighteenth century. The development of information and communication technologies and the Internet enabled the formation of groups at the global level, so the group financing takes the form of today's on-line platform.

In short, by using the power of the Internet and social networks, people with different ideas and projects and people who are willing to support them financially to implement their ideas and projects meet in one place, the so-called CrowdFunding platform.

The first online platform with elements of modern CrowdFunding (artistshare.com) commenced operations in October 2003 as a place for the promotion of musicians and other artists, raising funds for the realization of their new projects.

Promoting philanthropy raises social awareness making more and more people around the world feel a need to help others in various ways. It also increases the number of CrowdFunding platforms, so in 2013 there were as many as 660.

 

How does modern CrowdFunding work?

CrowdFunding appeared as a spontaneous response to globalization, bureaucracy and procedures, i.e. as a fast, efficient and transparent way for the promotion of projects and fundraising.

On the one hand there is a need for money, and on the other there are free resources. The need for funds in the form of projects with defined purpose, the required amount and other information is presented on the CrowdFunding platform. Free resources are normally placed as small individual amounts pledged by a large group of people to interesting, promising and socially useful projects.

Depending on the projects presented, the platform can be divided into:

  1. general
  2. specialized.

Depending on the way of fund collection, projects are divided into:

  1. Result-conditioned „All-or-Nothing“ - when after the completion of the project the titular (owner/author) receives the funds raised under the condition that the required amount or more was collected by the end of the project, i.e. that the financial goal was achieved - otherwise the funds are not withdrawn from the account of the financiers,
  2. Result-unconditional „Whatever-You-Pledge“ - when after the completion of the project the titular (owner/author) receives the raised funds regardless of whether the project has achieved its financial purpose.

Although CrowdFunding basically implies the need to help those in need, the platforms recognize four types of assistance:

  1. Donation-based (when you look for absolutely nothing for the money you give to help the project in which you believe),
  2. Reward-based support (when you get a reward defined in the project for money you give to support the project),
  3. Equity-based/Investment (when you receive a percentage share in the project for the money you pledge for project implementation),
  4. Lending (when under certain conditions you lend money for the project)

CrowdFunding in numbers:

Figures best speak of the potential of this funding method which is getting increasingly more popular each year:

Out of all the projects funded through CrowdFunding platforms 60% was realized in the United States, 35% in the EU, while the remaining 5% was realized in other countries.