What is crowdfunding? How Crowdfunding Works?

What is crowdfunding? How Crowdfunding Works?
What is crowdfunding? How Crowdfunding Works?

Are you interested by investing and questioning what the crowdfunding ?

On this article, I clarify all the things about crowdfunding.

You are going to study :

  • What’s crowdfunding ;
  • How Crowdfunding Works.

On the finish of this text, crowdfunding can have no extra secrets and techniques for you.

Let’s go.

1 – What’s crowdfunding? (definition)

Crowdfunding helps a venture develop along with your cash and that of different folks.

We additionally speak about participatory finance or crowdfunding. “Crowd” for crowd and “funding” for financing. In different phrases, crowdfunding.

The concept is to finance tasks by calling on the cash of a lot of folks.

Most frequently, everybody contributes with small sums. The amount makes it doable to succeed in giant quantities.

For instance, 20,000 folks contribute €50 on common. In complete, the venture raises a million euros.

Then, crowdfunding platforms join individuals who want cash with those that can finance them.

You possibly can finance tasks in all kinds of enterprise sectors:

  • Inventive: quick movies, music albums, exhibitions;
  • Cultural: books, reveals, documentaries;
  • Humanitarian: solidarity initiatives, associative venture;
  • Actual property: constructions, renovations;
  • Enterprise creation tasks: retailers, eating places, clothes manufacturers.

You’ve got 3 ways to finance tasks with crowdfunding:

  • Purchase shares or bonds of the corporate;
  • Lend your cash;
  • Donate cash.

Now let’s have a look at how crowdfunding works.

2 – Crowdfunding, how does it work?

People or professionals can ask the general public to take part within the financing of their venture.

In different phrases, anybody can fundraiser : people, auto-entrepreneurs, corporations, associations, foundations or communities.

Venture leaders publish a name for funds on a platform. They current the venture and the sum of money they wish to elevate.

The fundraising aim, or fundraising aim, is the minimal sum of money to succeed in to finish the venture.

Venture leaders set a marketing campaign length with a launch date and an finish date.

The marketing campaign length is the interval throughout which the general public can take part within the venture. That is the length of fundraising.

Then, the crowdfunding platform selects or not the venture.

As soon as the venture has been validated, the platform presents the venture to the general public.

The members then make subscription guarantees till the tip of the marketing campaign.

If the target is reached, the platform pays the cash to the venture leaders.

If the aim shouldn’t be reached, the platform returns the cash to the members.

Crowdfunding platforms

The French authorities difficulty a label to crowdfunding platforms.

The “Crowdfunding platform regulated by the French authorities” label is current on the platforms’ web sites.

Then, the Ministry of Ecological and Inclusive Transition created a label for inexperienced development.

The “Crowdfunding for Inexperienced Development” label ensures the transparency and environmental dedication of tasks.

Lastly, Bpifrance presents a list of approved crowdfunding platforms.

Purchase shares or bonds

Crowdfunding means that you can purchase shares or bonds to finance a venture.

There may be additionally speak of securities subscription, funding in monetary securities and even crowdequity.

In different phrases, crowdfunding platforms mean you can put money into corporations not listed on the inventory change.

You purchase shares or bonds of the corporate.

In return, the corporate could pay you dividends if you happen to purchased shares or curiosity if you happen to purchased bonds.

You should buy shares and bonds with a securities account, a PEA or a PEA-PME.

Listed here are examples of crowdfunding platforms the place to purchase unlisted shares and company bonds:

lend your cash

Then, crowdfunding means that you can lend your cash to finance a venture.

We additionally speak about crowdlending.

You’ve got two methods to lend your cash:

  • With curiosity;
  • With out curiosity.

Listed here are examples of crowdfunding platforms the place you possibly can lend your cash to people or corporations:

donate cash

Lastly, crowdfunding means that you can donate cash to finance a venture.

We additionally converse of participatory donation or crowdgiving.

You’ve got two methods to donate cash:

  • With compensation;
  • With out compensation.

The counterpart could be a live performance ticket, your identify on the quilt of an album or perhaps a product of the corporate.

Listed here are examples of crowdfunding platforms the place to make donations to people or corporations:

Right here, we went across the crowdfunding collectively.