Crowdfunding, what does this term mean?

Understand in this content the main concepts of crowdfunding, its features, objectives and also its importance

Well, if you’re one of those people who is always looking at the business world, you’ve certainly heard about crowdfunding.  Could you say what is the importance of crowdfunding for companies? In this content, understand the concepts of crowdfunding, the objectives, how it works and the importance of this practice.

After all, what is crowdfunding?

From the literal meaning of the word, crowdfunding means crowdfunding: crowd and funding . But what does that mean?

In short, crowdfunding happens when someone or a group of people seeks to raise funds in order to finance a project. In short, and for that, the project is widely publicized , which nowadays is carried out largely in the digital environment, in order to find more and more people interested in investing in it.

To get even closer to your reality, crowdfunding is the popular “online kitty”. Let’s say you created a business plan for developing an urban mobility app. However, your company still doesn’t have the money to put the project into practice. Using crowdfunding, you spread your idea so that people can invest money in what you intend to develop. For this, your project needs to be well explained and defined, so that people identify and invest in it. 

Crowdfunding is based on the collaborative economy, seeking to bring people together towards a common goal.

How does it work or Crowdfunding?

Crowdfunding is a collective financing, where those who invest have no relationship with those who are requesting the financial contribution.

However, it is not enough just to disclose on the internet that you need money for something: the crowdfunding process is structured, in which specific platforms are used to receive investments.

In other words, these platforms stipulate the campaign time and the necessary revenue for the project. However , as we mentioned before, it is necessary to describe the project well, preferably when the idea arose and which final objective you intend to achieve.

And, in addition to the platforms, it is possible to count on the help of advisors for an efficient dissemination of the project. Often, they have this separate service.

The types and modalities of Crowdfunding 

There are 4 types of crowdfunding campaigns . Are they:

  • Campaign without reward, or donation, widely carried out by NGOs, charities and even individuals in need;
  • Reward Campaign , where project developers offer reward amounts to donors;
  • Equity Crowdfunding , in which donors are seen as investors, given that they expect a financial return on investment, common in startups;
  • Debt Crowdfunding, which occurs when the donation is a kind of loan, which will be returned with interest later.

Regarding the modalities, two stand out:

  • The “All or Nothing”, where the creator chooses a minimum amount to be reached for his project that, when not reached, the chosen platform returns the money to the donors;
  • In the “Flexible” modality, no amount is stipulated, only a deadline for collection.

Discover 3 Crowdfunding platforms

Discover three platforms now to develop your crowdfunding campaign or to make your investment/donation.

Catharsis

Catarse is one of the best known platforms for the development of crowdfunding projects, launched in 2011.  According to the company’s website, almost one million people have already supported the projects that are advertised on it, almost R$ 2 million were raised and more than 15,000 ideas have already been funded.

In short, it is possible to support or develop a crowdfunding campaign. In the latter case, it is necessary to pay 4% to the platform in order to pay for the payment services, anti-fraud and staff .

Kickante

Kickante is another online kitty platform that allows for sharing or financing projects. However, in addition to the crowdfunding service, it has a financial marketplace with only two products: crowdfunding itself, which allows the creation of campaigns, and also Eventos do Bem, with more than 300 registered NGOs, waiting for donations.

Kickstarter

Kickstarter is a US crowdfunding company, but it gathers ideas from all over the world about various projects.

However, the platform operates in the reward campaign type, that is, to receive a donation, it is necessary for the creator of the idea to offer something in return to the donor. However, it is not necessary to offer values ​​on the company’s profits in exchange: personalized gifts or a copy of the material produced is also valid.

10% fee is charged to cover administrative expenses .

Improvement

Finally, the Benfeitoria platform is one of the largest that offers crowdfunding. If you use this form, choose between three modes: punctual, recurring and Matchfunding.

  • punctual: indicated when there is only one project
  • recurring: operation occurs by subscriptions
  • matchfunding: happens with the help of partners

Thus, in eight years of existence, the company has already made more than 2,500 projects feasible, with the help of more than 350 thousand people.

The importance of crowdfunding

Above all, crowdfunding is a good way to get funding to start a business. After all, especially for micro, small and medium entrepreneurs, there may be a lack of money when starting a new project.

In this context, crowdfunding appears as a solution to boost the development of new ideas in the market. After all, in  addition to financial contributions, those who develop a crowdfunding campaign also gain supporters of their idea. Thus, a project is born with its audience.

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