What is Crowd Funding?

Crowd funding is a great financing source for new startup businesses who have a limited budget.

Crowdfunding is the process of getting funding from a community instead of an individual or finance institution.  The network pools their money and resources to support the new business.

Why Should It Matter?

If you are starting a business you can post your project idea to the community. If the community sees your project and idea as promising, they give you the necessary funding. So this is without any interests or collateral.

Crowdfunding enables the small guys with big ideas to be able to secure funding to start their endeavor.

Crowdfunding originally began as a way to help generate funds for charities.  It then became popular for artists, including street performers. This was before it became a viable funding option for other small businesses.

Is Crowd Funding Popular?

In 1997 the British band Marillion even funded their entire tour through crowdfunding. So since it’s original inception this funding vehicle has been used for a very diverse group of entrepreneurs.

Crowdfunding is similar to angel investing as investors don’t require any principals returned or interests paid. With some crowd funding the business owner can even offer something in return for your supporters’ money.

Did You Know?

Millions of supporters are active in crowdfunding communities with money to lend.

But the average loan amount is smaller.  So, on average loan amounts are below $25,000. And in many cases loans are for even smaller amounts of $5,000 to 10,000.

Who Does Best With Crowd Funding?

Crowd funding is perfect for entrepreneurs who don’t have a standard business model that fits with normal funding.  It is also perfect for new business owners who have great ideas. If they only need a little money to get going, then it’s perfect.