What's Crowd Funding? - The Most Popular Way to Raise Capital for Startups

What is Crowd Funding

Crowd Funding is extremely popular among the entrepreneurs and the startups. Many organizations and individuals do use crowd funding methods to fulfill their requirements in strategic manner.

1. What is Crowd Funding?

Crowd Funding basically is an option that a person or an organization does have to raise capital for a cause or for a product or for an organization. There are four types of crowd funding which exists in the world right now.
  1. Equity Crowd Funding
  2. Product Crowd Funding
  3. Cause Crowd Funding
  4. Personal Crowd Funding
Each crowd funding options does have different characteristics and used for different purposes by the society and the crowd who are interested about the crowd funding options.

1.1 Equity Crowd Funding

Equity Crowd Funding is used by lot of startups who wants to raise capital as by offering shares of the organization to the public investors who would like buy shares of the organization in small chunks mostly.

This is much similar to an IPO, but by equity crowd funding could help the startup kind of organizations where they don't have large balance sheets to get list them-self in a public stock exchange.

There are many startups which started from Equity Crowd Funding and grew their way to being a publicly traded company on a stock exchange. Equity Crowd Funding does offer a kind of boost to the startups due to the people who will be investing by buying shares of the organization do have contacts and do have high profiles.

1.2 Product Crowd Funding

Product Crowd Funding is also massively popular among the entrepreneurs and as well as among the stable companies. Product Crowd Funding is like pre-ordering a product from a manufacture before the actual release. So the general public can order the products by paying for the product which will be delivered by a future time of the company.

By crowd funding, startups and the product manufactures can gain huge amount of cash injection for production of the products and to gain large sales volume by product crowd funding. There are many startups and established organizations which does product crowd funding in different methods.

1.3 Cause Crowd Funding

Crowd Funding for a cause is also popular method of crowd funding types which exists in the world. Charities and individuals who are interested on doing something for the good for a cause which could impact the environment, living beings or an society do tend to go for crowd funding for cause programs.

To build a school for the a community, to fight against deforestation, fight against animal equality, individuals and charities can launch crowd funding for cause like programs. 

1.4 Personal Crowd Funding

Crowd Funding for personal objectives are also possible and also a method that used by individuals in the world. To travel the world, to fight against cancer, to buy a house and to other type of objectives, individuals use Personal crowd funding methods. 


2. Who benefits Crowd Funding?

Crowd Funding is used by startups, entrepreneurs, social entrepreneurs, charity organizations, individuals and many stake holders can get benefited from the crowd funding methods.