Crowdfunding is a financing method that involves raising small amounts of money from a large number of people, typically through online platforms. The funds raised can be used to support a variety of projects, including creative endeavors, charitable causes, and entrepreneurial ventures.
Crowdfunding is typically divided into three main categories: donation-based crowdfunding, reward-based crowdfunding, and equity-based crowdfunding.
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Donation-based crowdfunding involves soliciting donations from individuals who support a particular cause or project. In this model, backers typically receive no tangible benefit in return for their donation, aside from the satisfaction of supporting the project or cause.
Reward-based crowdfunding involves offering backers a tangible reward in exchange for their support. These rewards can take many forms, such as early access to a product, merchandise, or exclusive experiences.
Equity-based crowdfunding involves raising funds in exchange for a stake in the business or project. This model is often used by early-stage startups looking to raise capital from a large number of investors.
