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CROWDFUNDING AND ITS COMPONENTS


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CROWDFUNDING AND ITS COMPONENTS

According to the study and research about crowdfunding, experts find that there are over 600 crowdfunding platforms that raise billions of dollars each year from all over the world. Crowdfunding is a fundraising platform that establishes very well like our social media. In recent years, the expansion of websites has made it possible to raise funds for nonprofit organizations, artists, musicians, and businesses.

Crowdfunding is a scheme for entrepreneurs and early-stage businesses to take their products and services to the next level by raising funds from the general public. Crowdfunding is a great way to meet your cash needs while still instilling in your consumers a sense of ownership in the company's success.

In my opinion, crowdfunding is the best way to raise money because it allows individuals and organizations to invest or contribute funds in crowdfunding projects run by people, companies, and charities in exchange for incentives, potential benefits, or for nothing.

Crowdfunding is different from the bank's scheme, where raising funds for any project is difficult. If your company or you want to raise money through crowdfunding then you first upload your projects, business or ideas to any crowdfunding platforms and wait for the approval of the administrator. The success in the crowdfunding platform depends on the project you submitted; if it offers something new or different, you will be successful otherwise not.

Crowdfunding platforms provide two tax schemes for small business entrepreneurs, Enterprise Investment Scheme ( EIS) and the Seed Enterprise Investment Scheme ( SEIS) but for getting these two tax benefits you must invest money for a minimum period of time.

There are mainly four kinds of crowdfunding available, and you should choose one based on your project's needs.

Reward crowdfunding

Reward funding is typically used for innovative projects in which the investors invest in your business for non-financial benefits or rewards such as helping you to pass an event, discounts on travel or food, free gifts, and so on.

Debt crowdfunding

Debt crowdfunding is used by companies with a proven track record of producing revenue in return for an investor's investment. It will be an excellent model for gaining campaign support.

Equity crowdfunding

This model is used by growth-oriented companies to grant the crowdfunder a share or a small stake in their own business, project, or plan.

Donation crowdfunding

In this model, a group of people is gathered and given the opportunity to donate money to a social or charitable project. Smaller organizations and individuals will be able to use this platform to raise funds for personal or charitable causes.

If you are an investor or a company entrepreneur, Before selecting the crowdfunding platforms you must think about some important things 

  • Each platform has its own set of fees.

  • The platform must be secure, and it should obey all legal requirements during the online fund transaction.

  • Some platforms have been created specifically for charity to technological products so think if it is suitable for your business before using it.

Crowdfunding is a source of funding, but it is a new financial method with some dangers, such as fraud, private and unregistered firms and platforms. So if you want to raise fund through crowdfunding then you must select the best platform for it.

 

 

 

 

 


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