What is a crowdfunding for business?

Crowdfunding is a fundraising method where businesses or individuals collect small contributions from a large audience, often via online platforms, to finance projects, ventures, or ideas, offering rewards, equity, or products in return.

Key features of crowdfunding are:

• Raising small amounts of money from a large group of individuals rather than institutional investors.
• Specialised crowdfunding portals and social networks provide an interface to connect with potential funders.
• Various returns include money, rewards, equity, interest, and revenue sharing offered to crowd funders.
• This method is best for startups and businesses with limited funding options.
• Entrepreneurs set a funding goal and receive money only if a predefined target is achieved.
• It provides an avenue to raise capital, especially for early-stage ventures with limited financing.
• The success of a fundraising campaign indicates demand and provides proof of concept.
• Requires extensive marketing across networks to attract funders and achieve targets.