Crowdfunding in the context of "Funding"

⭐ In the context of Funding, Crowdfunding is considered…

Ad spacer

⭐ Core Definition: Crowdfunding

Crowdfunding is the practice of funding a project or venture by raising money from a large number of people, typically via the internet. Crowdfunding is a form of crowdsourcing and alternative finance, to fund projects "without standard financial intermediaries". In 2015, over US$34 billion was raised worldwide by crowdfunding.

Although similar concepts can also be executed through mail-order subscriptions, benefit events, and other methods, the term crowdfunding refers to internet-mediated registries. This modern crowdfunding model is generally based on three types of actors – the project initiator who proposes the idea or project to be funded, individuals or groups who support the idea, and a moderating organization (the "platform") that brings the parties together to launch the idea.

↓ Menu

>>>PUT SHARE BUTTONS HERE<<<

👉 Crowdfunding in the context of Funding

Funding is the act of providing resources to finance a need, program, or project. While this is usually in the form of money, it can also take the form of effort or time from an organization or company. Generally, this word is used when a firm uses its internal reserves to satisfy its necessity for cash, while the term financing is used when the firm acquires capital from external sources.

Sources of funding include credit, venture capital, donations, grants, savings, subsidies, and taxes. Funding methods such as donations, subsidies, and grants that have no direct requirement for return of investment are described as "soft funding" or "crowdfunding". Funding that facilitates the exchange of equity ownership in a company for capital investment via an online funding portal per the Jumpstart Our Business Startups Act (alternately, the "JOBS Act of 2012") (U.S.) is known as equity crowdfunding.

↓ Explore More Topics
In this Dossier

Crowdfunding in the context of Equity crowdfunding

Equity crowdfunding is the online offering of private company securities to a group of people for investment and therefore it is a part of the capital markets. Because equity crowdfunding involves investment into a commercial enterprise, it is often subject to securities and financial regulation. Equity crowdfunding is also referred to as crowdinvesting, investment crowdfunding, or crowd equity.

Equity crowdfunding is a mechanism that enables broad groups of investors to fund startup companies and small businesses in return for equity. Investors give money to a business and receive ownership of a small piece of that business. If the business succeeds, then its value goes up, as well as the value of a share in that business—the converse is also true. Coverage of equity crowdfunding indicates that its potential is greatest with startup businesses that are seeking smaller investments to achieve establishment, while follow-on funding (required for subsequent growth) may come from other sources.

↑ Return to Menu

Crowdfunding in the context of Seed money

Seed money is the earliest financial support a new project receives, often arriving at a point when an idea exists but nothing concrete has been built yet. This first backing helps a venture take its initial steps and gives people working on it enough stability to continue developing their work. An investor puts capital in a startup company in exchange for an equity stake or convertible note stake in the company. The term seed suggests that this is a very early investment, meant to support the business until it can generate cash of its own (see cash flow), or until it is ready for further investments. Seed money options include friends and family funding, seed venture capital funds, angel funding, and crowdfunding. Seed money can come from informal contributions, early‑stage investment instruments such as SAFEs or convertible notes, accelerator programs, and public or community funding initiatives. Seed funding is also shaped by accelerators and policy initiatives that influence how new ventures find backing in their earliest stages.

↑ Return to Menu

Crowdfunding in the context of Alternative Finance

Alternative finance refers to financial channels, processes, and instruments that have emerged outside of the traditional finance system, such as regulated banks and capital markets. Examples of alternative financing activities through 'online marketplaces' are reward-based crowdfunding, equity crowdfunding, revenue-based financing, online lenders, peer-to-peer consumer and business lending, and invoice trading third party payment platforms.

Alternative finance instruments include cryptocurrencies such as Bitcoin, SME mini-bond, social impact bond, community shares, private placement and other 'shadow banking' mechanisms. Alternative finance differs to traditional banking or capital market finance through technology-enabled 'disintermediation', which means utilising third party capital by connecting fundraisers directly with funders, in turn, reducing transaction costs and improving market efficiency.

↑ Return to Menu

Crowdfunding in the context of Scythe (board game)

Scythe is a board game for one to five players designed by Jamey Stegmaier and published by Stonemaier Games in 2016. Set in an alternative history version of 1920s Europe, players control factions that produce resources, develop economic infrastructure, and use dieselpunk combat mechs to engage in combat and control territories. Players take up to two actions per turn using individual player boards, and the game proceeds until one player has earned six achievements. At this point, the players receive coins for the achievements they have attained and the territories they control, and the player with the most coins is declared the winner.

Stonemaier Games crowdfunded the development of Scythe, raising over $1.8 million through a Kickstarter campaign. Scythe was released to critical and commercial praise for its gameplay, combination of Eurogame and combat mechanics, theme, and the game artwork, which was produced by Polish painter Jakub Różalski under the name World of 1920+. Three major expansions, a spin-off, and a digital version have been released for the game.

↑ Return to Menu