Crowdfunding

INTRODUCTION

Crowdfunding has become a popular way of financing projects when other and more traditional methods do not work. Generally it works by someone pitching the idea for their project and then other people invest in the project raising the money that is needed.

HISTORY OF CROWDFUNDING

Crowdfunding is not a new concept and in fact it has been around before the internet provided crowdfunding websites. The most famous of early crowdfunding was the Stature of Liberty which was paid for by citizens of France and citizens of the United States.

The internet however made crowdfunding more accessible. The first ever crowdfunding site was Artistshare which started in 2003. Since then many crowdfunding sites have started and these include:

• Kickstarter
• RocketHub
• Gofundme
• Indiegogo

The above list only contains a few of the most popular crowdfunding websites and there are many more that are appearing all the time.

TYPES OF CROWDFUNDING

There are four main different types of crowdfunding as shown below:

• Reward based
• Lending based
• Equity based
• Donation based

Reward based crowdfunding is a scheme where investors receive a product or a service in return for money. Lending based crowdfunding is a scheme where investors lend the initial amount and get back what they put into the project after an agreed amount of time. Equity based crowdfunding is a scheme where investors become shareholders and are entitled to a share of the profits. Donation based crowdfunding is more of a charity for investors do not get back anything themselves but instead the investments are spent on a charitable cause.

PROJECTS FUNDED BY CROWDFUNDING

There are many different projects that have been funded by crowdfunding and yet many projects are from the entertainment industry. Films that have been funded in this way include:

• Super Troopers 2
• Wish I was Here
• Lazer Team

It is not only the entertainment industry that has benefitted from crowdfunding. The Pebble watch is the most famous of all crowdfunding projects as Pebble created their hugely successful smartwatch this way.

CONCLUSION

Crowdfunding is a popular way of raising money for many different projects. The majority are either charitable or entertainment based but is a way to get a good idea off the ground. In a climate where banks are either unable to or unwilling to lend money, this idea of crowdfunding is a strong alternative. Crowdfunding allows anyone to invest in a project or idea and it also allows people to fund their ideas when alternative methods just do not seem right.