Crowdfunding

Crowdfunding has different types. It involves raising money from many individuals, often through online platforms, who collectively contribute small amounts of capital to support the startup. Apart from the debt crowdfunding i.e. peer-to-peer lending, crowdfunding can also be donation-based or reward-based. 

Various online platforms list the borrowers. The interested investors can invest the funds in return for a reward in the form of a product or service or give away funds as donations. The scope of donation-based crowdfunding may be very limited as only a few investors would go for it. 

Advantages of crowdfunding: 

• No dilution of ownership.
• No requirement to repay the funds nor any interest.
• Less expensive.

Disadvantages of crowdfunding: 

• Success is not guaranteed.
• Online platforms may charge fees for using the platform services.