What is crowdfunding?

What is crowdfunding?

Crowdfunding is an alternative way to financially support projects. When entrepreneurs or associations want to fund a project, they usually go to the bank. Crowdfunding works without credit institutions.

Crowdfunding is a concept where many investors and / or interest parties are willing to invest in projects they feel involved with. Crowdfunding means literally funding by the crowd.

In crowdfunding, the contributions are usually relatively small. The amount of money that private individuals and companies invest ranges between ten and thousands of dollars. In exchange, they receive a predetermined return.

Crowdfunding is an alternative form of funding based on the traditional banking system.

"It is a social and humane way of lending, investing and sponsoring"

Usefulness of social media for crowdfunding

Not so long ago, you had to be wealthy to have your projects funded through crowdfunding. The worldwide success of social media such as Facebook, LinkedIn, Twitter and YouTube has changed this. Never before, sharing information with your network was so easy.

Motivation for investors

The image above shows the main forms of crowdfunding. It also gives you an idea of the main reasons why investors choose crowdfunding.

Advantages of crowdfunding

  1. You can reach a wide international audience.
  2. You can attract a lot of capital while you build a brand identity.
  3. You get valuable feedback on the project for which you collect money.
  4. You can turn investors into future customers.
  5. You no longer have to rely on major investments. Therefore, investors have less impact on your project.
  6. You can increase public awareness of your project by promoting it through social media.

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