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What is crowdfunding

What personality traits distinguish a person-entrepreneur from a person who does not have such abilities? It is not the availability of funds to start and run a business.This entrepreneur has the ability to generate ideas, organize activities and vision in decision making. If all this is available, but there is no money for the implementation of the idea, then the phenomenon of crowdfunding can help you.

The most common explanation for this concept is given by Wikipedia:
“Crowdfunding (public funding, from English crowd to funding, from crowd to“ crowd ”, funding to“ financing ”) is the collective cooperation of people (donors) who voluntarily pool their money or other resources together (usually via the Internet) to support the efforts of other people or organizations (recipients). ”

Such a fundraising can occur both for commercial purposes (support for start-ups and the creation of new companies), as well as with charities (assistance to victims of disasters, etc.). In order to participate in crowdfunding as a recipient, it is necessary to clearly formulate the purpose of collecting money, designate the necessary amount and justify all expenses. All this information, as well as data on the current state of the fundraising, must be accessible to everyone (usually this happens on special Internet sites).

Crowdfunding began its history quite a long time ago, and is now quite a popular way of collecting money from those who are not indifferent to the realization of their goal. Musicians, artists and other artists often resort to using crowdfunding – as a rule, their fans and art lovers are not averse to donating a small amount of money so that their idol can realize another creative project. Crowdfunding in business attracts donors by the fact that startups that are going to implement money have original and fresh ideas, which are very difficult to ignore.

Crowdfunding scheme
Everyone knows the expression “with the world on a thread – a naked shirt.” They can also describe the process of crowdfunding. If some people have great ideas and ways to translate them into life, while others have money for this, then why not combine their efforts and create something really worthwhile?

However, of course, large projects, for the implementation of which an impressive amount of money is needed, also require large investors. Collecting money in small installments is not always justified, since it can be delayed for a long time, and besides, it is not known whether the necessary amount will ever be collected at all. But if the project is really interesting, then large investors (or not very large, but nevertheless, still significant) usually do not take long to wait.

What is crowdfunding Participants in the crowdfunding process, namely those people who make cash contributions, then receive a certain percentage, which is determined by the amount of their contributions. In this regard, crowdfunding can be compared with a kind of loan, which is issued for doing business. However, for an entrepreneur, crowdfunding has a great advantage over the conventional bank loan scheme: if in the case of a loan, the interest must be paid regardless of the project’s profitability and its further development, then using crowdfunding, you can first develop the business well, and only then “thank you” for everything. who took part in it.

Distrust of crowdfunding
Initially, crowdfunding was based on the following principle: thousands and millions of people send $ 1-5 (or not at all) for the implementation of a large project – creating a movie, publishing a fiction book or supporting the activities of a public organization.

In 1997, the fans of the Marillion musical group raised almost $ 60,000 in order for their idols to travel around America with concerts. However, over time, the initial principles of crowdfunding have been slightly erased and now it is more associated with investor assistance to young startups. And everywhere, where money appears, there are people who want to profit from the credulity of others.

And on the Internet there are quite a few such scammers who create “fake” projects and allegedly raise money for them. Of course, their activity significantly undermined the credibility of all kinds of money collection through the worldwide network. However, despite this, the phenomenon of crowdfunding is not going to disappear anywhere and is only developing further.

For investors, no matter large or small, crowdfunding is not only a way to make a profit (that is, your interest)

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