Crowdfunding: The New Community Investment
With the global cyclical crises occurring in recent years, new arrangements of investments have emerged, and this is the case of Crowdfunding, which reached its peak in 2008. How did it happen? As banks implemented stricter lending policies after the recession, businesses struggled to obtain credit, leading many to seek alternative financing methods.
So, what exactly is crowdfunding? It is a collaboration between people who are part of a network, seeking to finance different types of projects. It is based on the idea that there are donors who want to support the ideas of others, which is why it is also called micro-patronage. In Latin American countries, this method has spread to housing projects.
How crowdfunding works
In practice, crowdfunding campaigns are carried out through a platform. This facilitates transactions and connects project promoters with donors. A campaign consists of the following steps:
1.????? Promoters enter the project into the platform. In this step, they must indicate what it is about, the amount to be financed, the estimated time to recover the investment, and the rewards offered.
2.????? The project must be published for a limited time. The most common periods are usually 30, 60, 90, or 120 days. In turn, the project must have a digital marketing strategy that collaborates with its promotion. For example, videos to inform, technical sheets, relevant content, etc.
领英推荐
3.????? When the last day of the assigned period arrives, it is verified whether the required amount of money was raised or not. If it is, the money is transferred to the promoters and the investors will receive the rewards when the project has finished. If this is not achieved, the money is not given to the promoters and the contribution is returned to the investors.
Most popular crowdfundings
Kickstarter and GoFundMe are well-recognized crowdfunding platforms in the United States. In Europe, numerous independent artists turn to Patreon to fund their music or intellectual property endeavors. Notably, community investment pools have expanded their scope beyond just real estate projects in recent times.?
Tell us, do you know any other types of crowdfunding? Have you tried any of them for personal projects?