What is crowdfunding
Crowdfunding (crowd funding, from the English. сrowd funding, сrowd – “crowd”, funding – “financing”) is a collective cooperation of people (donors) who voluntarily pool their money or other resources together, usually via the Internet, to support efforts other people or organizations (recipients).
What personality traits distinguish a person who is an entrepreneur from a person who does not have such abilities? It is not at all the availability of financial means to start and run a business.
A true entrepreneur has the ability to generate ideas, organize activities and foresight in decision making. If all this is available, but there is no money to implement the idea, then such a phenomenon as crowdfunding can help you.
Wikipedia gives us the most general explanation of this concept:
“Crowdfunding (crowd funding, from English сrowd funding, сrowd – “crowd”, funding – “financing”) is a 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 fundraising can take place both for commercial purposes (support for start-ups and the creation of new companies) and for charitable purposes (assistance to victims of disasters, etc.). In order to take part in crowdfunding as a recipient, it is necessary to clearly formulate the purpose of raising money, indicate the required amount and justify all expenses. All this information, as well as data on the current state of fundraising, should be available to everyone (usually this happens on special sites on the Internet).
Crowdfunding began its history a long time ago, and now it is a fairly popular way to raise money from those who are not indifferent to realize their goal. Musicians, artists and other artists often resort to crowdfunding – as a rule, their fans and just art lovers are not averse to donating a small amount of money so that their idol can realize the next creative project. Crowdfunding in business attracts donors because the startups for which money is raised have original and fresh ideas, which are very difficult to ignore.
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 bring them to life, while others have the money for this, then why not join forces and create something really worthwhile together?
However, of course, large projects, the implementation of which requires an impressive amount of money, also require large investors. Collecting money in small contributions is not always justified, since it can drag on 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 still significant) usually do not keep themselves waiting long.
What is crowdfundingParticipants in the crowdfunding process, namely those people who make monetary contributions, then receive a certain percentage, which is determined by the amount of their contributions. In this regard, crowdfunding can be compared to a kind of loan that is issued for doing business. However, for an entrepreneur, crowdfunding has a great advantage over the usual bank loan scheme: if in the case of a loan, interest must be paid regardless of the profitability of the project and its further development, then using crowdfunding, you can first develop the business well, and only then “thank” everyone with interest. those who took part in this.
Distrust of crowdfunding
Initially, crowdfunding was based on the following principle: thousands and millions of people send 1-5 dollars each (or how many do not mind) for the implementation of some big project – making a movie, publishing an art book or supporting the activities of some public organization.
That is how, in 1997, fans of the musical group Marillion raised almost 60 thousand dollars so that their idols would travel all over America with concerts. However, over time, the original principles of crowdfunding have faded a bit and now it is more associated with investor assistance to young startups. And wherever money appears, there are people who want to cash in on the gullibility of others.
And there are quite a lot of such scammers on the Internet who create “fake” projects and allegedly collect money for them. Of course, their activities have significantly undermined the credibility of all kinds of fundraising through the worldwide network. However, despite this, the crowdfunding phenomenon is not going to disappear anywhere and only develops further.