What is Crowdfunding? Essay

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Crowdfunding Crowdfunding is basically the process of pooling finances from public or “crowd” where the finances are utilized to generate revenue to start a company, invent a product or for a social cause. The growing popularity of the crowdfunding technology can majorly be attributed to the social media, information technology and the cost-effective nature of the process. The government also recognized crowdfunding as a way to provide capital for underserved market areas and hence proposed the JOBS act in 2012. The act proposes regulations on how the crowdfunding should be done so as to protect all the participants involved in the crowdfunding process including the investors , organisations and the crowd supporting the organisations. It…show more content…
Crowdfunding Crowdfunding is basically the process of pooling finances from public or “crowd” where the finances are utilized to generate revenue to start a company, invent a product or for a social cause. The growing popularity of the crowdfunding technology can majorly be attributed to the social media, information technology and the cost-effective nature of the process. The government also recognized crowdfunding as a way to provide capital for underserved market areas and hence proposed the JOBS act in 2012. The act proposes regulations on how the crowdfunding should be done so as to protect all the participants involved in the crowdfunding process including the investors , organisations and the crowd supporting the organisations. It is in this context that it is important to discuss the types of crowdfunding, growth of crowdfunding, advantages of crowdfunding and disadvantages of crowdfunding in the following paper. The major types of crowdfunding are: Donation based crowdfunding Rewards based crowdfunding Credit based crowdfunding Equity based crowdfunding Donation based crowdfunding: The pooling of money from the crowd to serve a personal reason or a social cause is called donation based crowdfunding. Rewards based crowdfunding: The funding of money from the crowd where the backer is awarded some kind of reward such as a pre purchase of a product before it is introduced to the retail market in exchange for the funding is called a rewards based crowdfunding. Credit
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