Crowdfunding is, at its most basic, raising money from a group of people. However, when we talk about crowdfunding these days, we’re usually talking specifically about raising money online from a large group of people. Crowdfunding is a great option for people who don’t want to or don’t have the resources to get funding from traditional sources like banks or venture capitalists.
Three Essential Actors in a Crowdfunding Campaign:
1) the person raising money (let’s call them the “creator”)
2) the people or groups who support that person by donating money (the “backers”)
3) the crowdfunding platform (the “platform”). Sites like Kickstarter, IndieGoGo, and GoFundMe are all examples of popular crowdfunding platforms that you’ve probably heard of. That’s where the crowdfunding magic happens.
There are a few different types of crowdfunding platforms, including rewards, donation, peer-to-peer, and equity crowdfunding. We recommend rewards or donation crowdfunding for people who are just starting out, so that’s what we’re going to focus on here.