Crowdfunding is a collective financing network, usually online, that through financial or other donations, they manage to finance a certain project in exchange for rewards
Currently, depending on the type of reward that the participants receive in exchange for their participation in the project, there are five models of crowdfunding:
From donations: Those who make contributions do not expect benefits in return Rewards: Contributors will receive a reward for their contribution. Stock: Those who receive shares of it. Loans or crowdlending: This is a mass financing, through loans from a company in exchange for an interest rate on the money borrowed. Of royalties: When you invest in a certain project or company and you hope to obtain a part, even if it is symbolic, of the benefits.
How does crowdfunding work?
The operation of crowdfunding depends on the type of crowdfunding that we have selected as a form of financing. However, these are the main phases:
The entrepreneur sends his project, or his business idea, to a crowdfunding platform, which is usually online, to be a candidate for financing. So that your project can be valued, it indicates: a description of it, what amount you need, how much time there is to collect what you need, type of crowdfunding to choose, etc. Assessment of the project: the community or the platform itself values the interest of the project.
The project is published on the platform for the time indicated in the application. It is the period of time that people have to invest.
During the time that it is public, it is promoted to the maximum to obtain the financing.
Project closure. When the established term ends, the project is closed and it is checked how much funding has been obtained.