The 4 Types of Crowdfunding

In the past, shipping a product or launching
a company was only an option for those who had the money, or for those who could attract
an investment from venture capitalists. Crowdfunding websites like Kickstarter and
Indiegogo have drawn a lot of attention from entrepreneurs, policymakers, investors, and
the public. Their enthusiasm is understandable: today, these internet marketplaces connect
people seeking funds with hundreds, if not thousands, of supporters. But the idea that an entrepreneur could raise
funds from a large number of sources, each providing just a small amount, isn t really
new. In 1985, Paul Hogan and John Cornell tapped
1,400 Australian investors to produce the blockbuster movie Crocodile Dundee. In the
1970s and 1980s, limited partnerships which required minimum investments of no more than
$2,000 became a popular form of financing everything from shopping malls to oil and
gas exploration. And charities, of course, have long relied on funding drives that aggregate
thousands of small donations. What is new is the emergence of powerful internet
platforms that enable funding campaigns. These crowdfunding platforms lower the costs of
running a campaign by leveraging the geographic and social reach of the internet to connect
fundraisers with millions of potential backers. In exchange, these platforms charge a fee,
typically a percentage of the amount raised. There are four major crowdfunding models.
It’s easiest to classify them according to what they offer in exchange for the funds
they receive: either equity, debt, some type of reward, or nothing but the satisfaction
of donating to a good cause. Equity-based sites, such as AngelList and
CircleUp, provide a platform where people can sell shares of their company. This type
of funding only represents a small fraction of all crowdfunding activity. Legal and practical
constraints have slowed things down, but upcoming regulatory changes could make a big difference. Today, peer-to-peer lending sites like LendingClub
offer a crowdsourced solution for debt. It’s part of a larger revolution in “Financial
Tech,” internet software that aims to disrupt the traditional finance industry. While banks
typically serve as an intermediary for loans, the peer-to-peer model allows one person,
or many, to lend money directly to those who need it. This allows savers to earn more,
and borrowers to pay less. Rewards-based sites are one of the major innovations
in crowdfunding. Funders back campaigns that interest them, with the promise of receiving
something in return. Usually a copy of whatever product they’re backing. Kickstarter is the
most well-known example of this model, and has been used to fund everything from the
creation of albums and short films to the development of 3D printers and smartwatches. Finally, there are charity platforms like
Causes or Crowdrise. Fundraisers usually do not offer anything in return for donations,
except for the information and feedback about the good deeds that those campaigns have enabled. Crowdfunding has been growing at a steady
rate worldwide, opening up new opportunities for both entrepreneurs and investors. Crowdfunding has already demonstrated the
ability to promote innovation, wealth creation and more but of course, it has also revealed
certain potential shortcomings. To find out more, please read the California
Management Review special issue on crowdfunding, and subscribe to our channel for the latest
business insights from top global researchers.

21 comments on “The 4 Types of Crowdfunding”

  1. Asad Ali says:

    We are sharing our campaign link and hope that people could provide us their support please visit their. We are not fake, What ever we want we have disclosed their.

    Thank you

  2. Cyclo Story says:

    Hello everybody! Support us on

  3. Rotimi Shittu says:

    I am trying to start a debt crowdfunding platform to sponsor personal projects. Do not know how to get inactive sites to acquire . Any help ?

  4. Shatabdi Roy says:

  5. Hafiza BRK says:


  6. mov cave says:

    Sharing my first campaign. Please contribute even your $1 counts. Help me to make a masterpiece.

    Support me, Help me to become successful.

  7. Mohamed Rasied Mohd Yusof says:

    Dear People,
    I need some help from you all, I'm broke and in need of help financially.I'm in the brink of a divorce from my wife soon and I'm out of job since last November when I had a fall while at work and injured and had to undergo I'm unable to work because of my injury and in a lot of debts.I hope that you all can help to donate me with a small amount of money to tide me over.If you all can help me to donate me,pls transfer to my account Post office savings bank(POSB).271 18333 0 Your help is greatly appreciated.Thank you

  8. Thrinacia says:

    Thanks for explaining the different types of Crowdfunding. Great video! For those that want to learn more about Crowdfunding, you can check out Thrinacia's YouTube channel:

  9. H. S. says:

    As a funder, my concerns at the first place are : "risk assessment"
    Any idea what are the risks of being a funder ?

  10. Amazing world says:

  11. Sibongile Gala says:

    I'm Sibongile from South Africa but I'm in Brazil can somebody please show the right way to use tokens to register 29$ and 250$

  12. d hite says:

    right off from the start, i spoke with a rep from INVENTURE X. absolutely rude, felt like a scam in the making. i would be careful doing business with these new breed of companies.

  13. Sara Yasmine says:


    Your sponsorship will help ease my financial burden as well as it can ensure that I am able to continue to work harder in order to achieve my life-long dream to be a teacher. From the bottom of my heart, thank you so much for your time. May your kindness be returned to you tenfold 💞

    P.S I'm so close to my goal! All I need is $67.33 and I'm all set. Please, I'm praying for your kindness right now 😭

  14. Medicine Creek Man Survivalist says:

    I would like to start my own platform. How can I get started?

  15. Vince Gulino says:

    What are these shortcomings? How does he leave us with that cliff hanger?

  16. My fields says:

    Your Network is your Networth. Team Work makes the dreams work for you, so if you believe in the Power of Teamwork,can motivate and lead your team to raise funds from $20 to $2400 Over and Over… Again and again… Instantly,Unlimited Times… Without being at the mercy of any Company as to when and how to Pay You, then click all the links, step by step, Understand the Power of fundraising,donate 2 people in the System,introduce 2 friends in the System and get 2 donations from them, help your down line team to duplicate themselves. Be Inspired Teambuilding Click link Click link Donating for a good cause is always applauded Worldwide, how would it be if you helped your friends in raising funds for themselves from $20 to $2400 Again and again daily,hourly every day UNLIMITED TIMES… just by just donating 2 people in the impact101 fundraising Platform and Ultimately raising funds for yourself UNLIMITED TIMES… ​Website ​ किसी अच्छे कारण के लिए सहायता करना और दान करना सबसे अच्छा वैश्विक कार्य है और कैसा होगा य​​दि आप सहायता और दान करके अपने लिए धन जुटाने में असीमित सहायता प्राप्त करें और सिर्फ अपने ही दोस्तों की मदद करके स्वयं के लिए धन जुटाएं Mobile Landing Page

  17. Rashu Shehra says:

    Your content number…….sir

  18. mrzimi93 says:

    Great Info!

  19. Rathod Raju says:

    My name is Raju bhai Rathod

  20. Rashaard Nolan says:

    If your reading this comment, i hope you succeed in life

  21. Reduction Energie says:

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