What Are The Different Types of Crowdfunding?

Crowdfunding allows you to raise capital by bringing together friends, family members, customers, and individual investors. 

This approach taps into the collective efforts of a large pool of individuals-primarily online via social media and crowdfunding platforms-and leverages their networks for greater reach and exposure.

Different types of crowdfunding

There are many types of crowdfunding. The type of product you offer and your growth goals will determine which crowdfunding method you choose. You can also choose various types of crowdfunding platforms through https://crowdfunding-platforms.com/how-to-invest-in-crowdlending-p2p-lending. 

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There are three main types: rewards-based, donation-based, and equity crowdfunding.

Crowdfunding that is donation-based

Donation-based crowdfunding is any crowdfunding campaign that does not yield a financial return to investors or contributors. Donation-based crowdfunding is a common method of raising money for charities, medical bills, disaster relief, and nonprofits.

Crowdfunding with Rewards

Reward-based crowdfunding is where people contribute to your business in return for a “reward”, usually a product or service offered by your company. This method is not a donation-based crowdfunding option. 

Equity-Based Crowdfunding

Equity-based crowdfunding is different from other methods. Contributors can trade capital for equity shares to become part of the company’s ownership. Your contributors become equity owners and receive a financial return for their investment. They also receive a share in the dividends or distributions.