Saturday, 12 July 2014

The Crowdfunding Breakdown!

The Crowdfunding Breakdown!

Debt Based Crowdfunding

P2P Lending is where the crowd lends money to a person or company
with the expectation of having the principle fully returned and
receiving interest similar to any loan. The benefit of this type of debt
funding is that you have the ability to receive lower than market rate
loans as you pay off the debt. The Companies and individuals that are
best suited for P2P Lending are planning on multiple rounds of funding,
but do not want to part with equity


Equity Based Crowdfunding

Equity crowdfunding is crowdfunding where the exchange is company
equity, or ownership, and not goods or services. The idea is very
similar to how common stock is bought and sold on the stock market.


Royalty Based Crowdfunding

If a founder doesn’t want to sell equity in his company to raise
money the royalty may be the answer to raise quick cash and keep control
of the company. Investors lend money for a guaranteed percentage of
revenues for whatever the business is selling.

Takeaway


Crowdfunding is a new mechanism for marketing and funding businesses
or project by promoting directly to the crowd using social media and
email marketing. There are an array of crowdfunding types that fit a
certain funding need. This is a rapidly growing industry that has the
ability to quickly create funding and marketing for any business or
creator in a low cost and efficient manner.