The Emergence of Crowdfunding

Crowdfunding is a technique which helps people meet their needs without taking loans from banks by asking others for help.

Is Crowdfunding Legal?

Donation based crowdfunding is legal in almost every country. The most widely used crowdfunding platforms like Indiegogo and Kickstarter are based on donation crowdfunding. However, every state has its own regulations regarding equity crowdfunding. It is legal in Europe and the government of the United States has recently passed a bill for the legalization of equity-based corporate crowdfunding.

Types of Crowdfunding

There are four types of crowdfunding:

1. Simple Donations

This is the simplest type of crowdfunding. People use a platform to address fundraisers and crowdfund their needs. In donation-based crowdfunding, fundraisers willingly donate without any interest. Most of the crowdfunding websites which support charities and welfares are based on donation-based crowdfunding.

2. Repayment Crowdfunding

This type of crowdfunding is usually common in corporate fundraising. In repayment crowdfunding, donors are given some reward. For example, if a mobile app designer applies for repayment crowdfunding, he/she might offer fundraisers a profit share or some reward. Reward-based crowdfunding attracts more fundraisers and reaches the funding goal in less time than other types of crowdfunding.

3. Loan Crowdfunding

Loan crowdfunding allows users to crowdfund in the form of loan. It means that they will have to pay back the borrowed money with a set interest rate. This kind of crowdfunding is common in big budget business ventures.

4. Equity-Based Crowdfunding

Equity-based crowdfunding became popular in 2010 after the introduction of the JOBS Act in the United States. Equity-based crowdfunding requires borrowers to return funds with actual shares in their product or business.

Emergence of Modern Crowdfunding

The technique of crowdfunding is not new. People have been collecting donations from their friends and family to fulfill their needs for centuries, but with the passage of time the technique of crowdfunding has evolved a great deal. Here is a quick overview of the evolution of modern crowdfunding.

1997 – The First Crowdfunding Project

In 1997, a British rock band launched a campaign to collect funds for their music concert. People responded to the call and donated more than $60,000. It was the first successful example of crowdfunding.

2000 – ArtistShare

Following the success of the British band crowdfunding in 1997, ArtistShare, the first ever crowdfunding platform was launched in 2000. Shortly after its launch, a number of crowdfunding forums began to emerge from all across the world.

2008 – Growth in Crowdfunding

Years after 2000 are marked with the massive progress of internet. A number of social networking sites began to emerge and started using online tools for attracting more donors. Due to its success, crowdfunding started gaining fame in the corporate world. A number of entrepreneurs and small business owners started relying on crowdfunding instead of bank loans for launching business ventures.

In 2011, massive growth was recorded in crowdfunding industry, as its profits tripled from $530 million to $1.5 million. The industry is giving a tough competition to organizations like small business associations, as most of the business owners and start-ups prefer crowdfunding for establishing their business.

2012 – The Crowdfunding Bill

Keeping in view the success of crowdfunding in the United States and all across the world, President Obama signed the JOBS (Jumpstart Our Business Startups) Act in 2012. The act, commonly known as the crowdfunding bill aimed at legalizing crowdfunding for small business and entrepreneurs. Obama said that crowdfunding can lessen the financial burden on banks. The bill also removed ban from public advertisement of corporate fundraising.

Although the bill has been passed, some policies will be revised in 2013 to make crowdfunding a secure financing technique for small business owners and start-ups.

New Crowdfunding Forums

Currently there are more than 500 online crowdfunding websites, which offer financial assistance to millions of people for crowdfunding their personal needs, non-profit social and cultural causes and business ventures. A number of crowdfunding firm owners are also developing mobile crowdfunding apps.

5 Popular Crowdfunding Websites

Although there are a number of online crowdfunding forums, it is very important to choose a website which is reliable and charges reasonably. Here is a list of some of 5 most popular crowdfunding platforms you haven’t heard of.

1.GoGetFunding

GoGetFunding is an online Australian crowdfunding website. The site supports all kinds of projects. Users can post projects from wish list to corporate ventures, GoGetFunding supports all. Although the site allows crowdfunding for corporate needs as well, many people use the platform for crowdfunding Christmas gifts and holiday plans.

2. Pozible

Pozible is another Australian online crowdfunding platform which supports all kinds of non-profit cultural and social projects. Pozible is visited by users from all across the world. This fundraising platform also supports emerging artists.

3. FundRazr

FundRazr is an all purpose crowdfunding websites. The website is famous due to its simple design which facilitates users with the ease of posting projects. The app experiences increased users’ traffic as thousands of people post their gift lists on FundRazr.

4. WishBooklet

WishBooklet is a crowdfunding app which allows users to collect funds for gift giving, holiday plan financing and more. The web-app allows people to crowdfund the gifts they really want. WishBooklet allows multiple people to crowdfund a gift or just a single individual to purchase a gift. The money you raise on WishBooklet goes straight to your bank account.

5. Crowdtilt

Crowdtilt is an easy to use gift funding app which allows users to collect funds for gift fiving and other non-profit causes. All users have to do is post their wish list, gather people and attain the funding goal. Users can receive funds as direct deposit.

Can Crowdfunding Help in Gift Giving?

A number of online crowdfunding platforms have wide networks spread all across the world. These platforms are taking considerable measures to help welfare centers and charity organizations. A number of charities visit crowdfunding websites to crowdfund Christmas presents for unprivileged children and needy people.

Crowdfunding is not only popular among entrepreneurs and business owners, but it has also become the favorite financing option for personal needs. People make their wish list and post it on an online fundraising platform of crowdfunding their needs. Holiday season is the best time to try an online fundraising website to crowdfund holiday plans and gift giving.