What is crowdfunding and how does it work?
Crowdfunding can get you money to build a business, and the attention to build a customer base. Learn about crowdfunding and how it helps businesses grow. Discover the different types of crowdfunding and how to get involved.
Crowdfunding is lots of people – a crowd – putting in money to support a project.
The benefits of crowdfunding?
No worries about payback.
Easy way for business owners to get capital.
Proof of concept.
Depending on the type of crowdfunding, investors either donate money altruistically or get rewards such as equity in the company that raised the money.
People give an online contribution in return for a reward. The rewards may differ depending on how much is given – but often include the product or service you’re planning to launch. For some people, this has taken over from going to family and friends to get a project off the ground.
This form of crowdfunding lets you raise funds from the public in exchange for unlisted shares (equity) in the business. Unlisted shares aren’t listed or bought or sold on an official stock exchange. Equity crowdfunding is better for raising larger amounts than you could get through rewards-based crowdfunding. There are rules around how much can be raised, how much can be invested, and how often you use them.
Crowdfunders give you money based on a request or call to action. This works best with a product or service that benefits a cause or charity, but it can be used for small business growth if you make the right pitch.