Types Of Crowdfunding You Should Know

Crowdfunding has been popular because of the ease it provides while lending money. There are several platforms available where you can get funding for your jobs. You may visit https://crowdfunding-platforms.com/how-to-invest-in-crowdlending-p2p-lending to get a list of these platforms.

Crowdfunding could be classified into four different types:

  • Equity-based Crowdfunding
  • Debt-based Crowdfunding
  • Reward-based Crowdfunding
  • Donation-based Crowdfunding

real estate crowdfunding

All of the crowdfunding types except for Equity-based have an immediate value proposal. The donation-based is mainly for social causes in which you give your money and do not expect anything in return.

Reward-based crowdfunding works extremely nicely to get a product/hardware startup. Consider it like a pre-order. You love a solution along with your purchase in months beforehand that gives working funds to the founders and you receive the first variation of the product alongside some bragging rights!

Debt-based crowdfunding is similar to a loan where you get back to your main back combined with some curiosity (quantum fluctuates from case-to-case).

Coming to this last kind – Equity-based crowdfunding is like purchasing shares at a company/startup. This has the highest range of ROI when you compare it with different forms. But, it’s deemed illegal in certain nations like India.

There are various platforms such as Mintos that have functioned around a method for Equity-based crowdfunding. These programs will list you as an angel investor and you also get access to different startups recorded on the platform eased by the stage. Pledging of funds could occur online however, the transfer of capital always occurs offline.