Crowdfunding is an alternative way for businesses to get the finance they need. By seeking investment or pledges from a variety of many different people/businesses. This method of raising finance can also be often be referred to as either ‘crowd financing’ or‘equity crowdfunding’

As it’s not uncommon for people get confused by in their understanding of how this particular funding option works. It is important to note that this route to finance is different to that of Peer to Peer Lending which is what it often gets confused with.

For businesses, crowdfunding is a way for them to try and get the finance they need by raising the investment and/or business finance by tapping into a ‘crowd’ of like – minded investors.

Those like – minded investors who are willing to invest via this financing model, do so with relatively small amounts of cash being pledged in exchange for a stake the business.

The matching up of investors to those companies looking for financial investment is done via an internet-based crowdfunding platform and because of automated technology getting funding can be a relatively quick process, and a quick route to finance

Different types of Crowdfunding

There are a growing number of online platforms which use the crowd funding finance model to help businesses access finance. Such platforms can often be bespoke in who or what they target – such as only offering a funding facility for technology businesses, or design businesses.

There are some platforms which purely serve a social aspect and often in these cases no equity is sort in return for amounts being pledged, they are perhaps seen more a donations for a common cause.

So, crowdfunding does mean that businesses looking for a business finance have to part with some equity.

Sorry Not Currently Covering Crowdfunding