What is crowdfunding?
Crowdfunding is a method of raising small amounts of capital from a large group of people using the internet and social media. Unlike venture capitalist or angel investor funds, the money raised through crowdfunding does not necessarily buy in the lender, and there is no guarantee that it will be paid back if the business is successful. Instead, individuals are asked to make microinvestments or donations for the causes and ventures they advocate so that the work can be completed.
Crowdfunding is also called crowdfunding capital.
Crowdfunding is becoming a common funding method for citizen journalists, social entrepreneurs, activists, open source software projects, artists, charities, and so on. In theory it goes between investing and donating, but the amounts are generally small enough ($ 1- $ 20) that few people expect to get any return on the money they get for crowdfunded projects.
Crowdfunded projects are usually carried out in the form of social improvement projects or non-profit activities, but some crowdfunding sites set up a framework in which crowdfunding can come from for-profit ventures with an equity stake with possible payouts if the business is successful.