Definition of Crowdfunding

Definition of Crowdfunding | Benefits and Types

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Definition of Crowdfunding – In recent years, we often hear the term crowdfunding, but there are still many of us who do not understand and understand the meaning.

At this time crowdfunding is one of the keys to success whether the investment is in the form of debt, gifts or equity.

Crowdfunding can be a good way to start a business or develop your business, especially in startup rooms and SMEs.

Definition of Crowdfunding

crowdfunding websites

A simple understanding of crowdfunding is collecting funds or money from the public.

According to Wikipedia, Crowdfunding is an activity of raising and from a number of people to capitalize on a project or business carried out through the internet.

Usually, they are looking for funds by creating a project profile or their business on a website or web then they use social media and traditional networks to raise funds.

Benefits of Crowdfunding

At the broader stage of investor search, fundraising is a flexible solution for startups or businesses.

Here are some of the benefits of crowdfunding from the many benefits:

1. Reach

By using a crowdfunding platform, you will have access to thousands of trusted investors.

This will make your project visible so that you can interact with investors and also share fundraising campaigns.

2. Presentation

With crowdfunding, you can present your business such as business history, attractiveness, offers, market opportunities, etc.

Of course, this will help investors to get to know and explore your business so that the project has an appeal.

3. Marketing

When you launch a crowdfunding campaign, you can market the campaign through social media, e-mail or other online marketing techniques.

With the right online marketing, this can help you to drive traffic to your site so that it can double the fundraising success.

4. Concept Validation

By presenting your business concept in the community can increase your chances of validating and improving your campaign.

When potential investors begin to be interested in interest and ask questions, you can see the advantages and disadvantages of your business concept.

Of course, this can help you to improve and validate the business concept.

5. Efficiency

One of the biggest benefits of crowdfunding is that fundraising is becoming more centralized and targeted.

By simply creating a comprehensive profile, you can use it to channel all prospects and potential investors.

Therefore you no longer need to pursue each potential investor by making a lot of printed documents and updating them at any time.

You simply present everything online so that it is easy to access so you have plenty of time to run and grow your business.

Types of crowdfunding

Similar to other types of business capital increase there are several types of crowdfunding.

The type of crowdfunding that suits your business depends on the type of product or service you offer.

There are at least 3 main types of crowdfunding, which are donation-based, gift-based and equity-based.

Donation-based crowdfunding

This type of crowdfunding is a type of fundraising where you don’t get financial returns to investors or contributors.

This donation-based crowdfunding is usually done on fundraising for natural disaster relief, medical bills, charities, etc.

Gift-based crowdfunding

This type of fundraising is actually almost the same as donation-based crowdfunding because investors or contributors do not get financial returns.

In this type of crowdfunding, parties who become investors or contributors get rewards in the form of prizes ..

Crowdfunding has some equity

Unlike donation-based or gift-based crowdfunding types, equity-based crowdfunding allows donors to become owners or parts of a company by trading capital (equity shares).

As an equity owner, your contributor has the right to receive financial returns on their investments in the form of profits in the form of dividends or distribution.

Such is the discussion about Definition of Crowdfunding, Benefits, and Types.

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