BY ROBIN GHOSH,
ECONOMIST AND BUSINESS MENTOR.
KOLKATA, 22 JUNE 2024.
Yes, you can.
But, before we go forward – let us first understand what is crowd funding?
Crowd funding is an amazing alternative to help entrepreneurs to gather funds from a large number of people through the internet .
In other words, crowdfunding means tapping a large, geographically dispersed audience given the name as ” the crowd” , for a small source of money to fund a project or a venture.
MODELS OF CROWDFUNDING
A quick research indicates that there are many models of crowdfunding – depending upon what is the type of project – you have to choose an appropriate model.
There are many models of crowdfunding.
Let us make a quick survey.
1 Donation Model
Crowd funders do this type of funding for self actualization, satisfaction, and to belong to welfare strata of society. There is no expectation of monetary return.
2 Reward Model
There is a group of crowdfunders who sponsor projects for the benefit of the society in areas like health, environment, training programs. The reward is – in the form of “thank you notes” or a “Tshirt”.
3 Equity Based Model.
This is investment based crowdfunding. Here the investor puts his money in the proposed project and expects share in the venture, dividend, capital gain or voting rights.
4 Lending Based
Model
Crowd funders lend money against interest and repayment of principal or on a revenue sharing basis.
Entrepreneurs and Crowdfunders choose a crowdfunding model according to their needs.
The most elevating factor is – entrepreneurs and project creators – who can not finance their projects by their own money or money from friends and venture capitalists – crowdfunding often shows light at the end of the tunnel.
To conclude:
1 Crowdfunding does not require strong personal relations or ability to pledge.
2 It is an open call, essentially through the internet.
3 You can tailor the model based on win-win conditions.
4 It is indeed an important component of seed funding.
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