Crowdfunding Basics – This Really Isn’t Rocket Science
As we delve into crowdfunding basics we need to take a look back in history. Think back a decade or so ago. If you wanted to raise money for something, be it a new business venture or an invention, what did you do? In all likelihood, you had to go to the bank to obtain a large loan, and pay interest on it. Or you would have to find possible investors — people with access to a lot of funds, for example, who would then own a portion of whatever it is you’ve created or started. Or you’d self-fund your venture out of your savings account or on credit cards. Seriously. People did that. Some still do.
But in recent years, a new way of funding ideas and creations has taken root and is flourishing. You could almost call it democratic capitalism. It’s a funding mechanism that involves a lot more personal interaction where people vote with their dollars on the companies, products, services or causes they believe in: crowdfunding.
Crowdfunding is just what its name implies: A number of people all contribute to a funding opportunity, giving in amounts that can range from very small to very large. Those people often receive something in turn, such as a product that the crowdfunding opportunity is going to try to create. Or partial ownership in a company in the form of stock.
Crowdfunding basics are really all you need to know to get started. I’m frequently asked crowdfunding questions on Quora and I can’t help but wonder why some people think crowdfunding is so complicated when it really isn’t. Crowdfunding in a nutshell simply is selling somebody on your idea or vision.
Want to learn more? This graphic gives you all of the crowdfunding basics.