Crowdfunding is all about persuading people to give you a little contribution in terms of money. As soon as you get tens of thousands of donors, you've got huge money available.
This has become possible in recent decades thanks to some proliferation of sites which enable nonprofits, artists, musicians and yes, companies — to increase money. This is the societal networking variant of fundraising.
There are several trusted crowdfunding platforms around the world, together with fundraising hitting billions of dollars each year, according to research.
How it works:
The most frequent sort of crowdfunding is using websites like Kickstarter, in which contributions are sought in exchange for specific rewards. That could mean completely free merchandise or possibly an opportunity to participate in designing the service or product.
It's also possible to utilize crowdfunding to build loans and royalty funding. Some websites enable members to immediately invest in and borrow money from each other, together with the promise that removing the banking middleman means ‘either side can win’ from the trades.
Royalty financing websites seem to be rare, but the thought is to connect business owners together with investors that give money for a bonded percent of earnings for whatever the company is selling.
The holy grail would be to sell company shares or ownership stakes in the organization on crowdfunding websites, since it may be similar to a mini-IPO without the traditional hurdles.