Crowdfunding

It is the practice of acquiring funds from a large number of people to sponsor a group of activities or ventures. They make only a minor contribution. It is usually done via the internet. In other words, they raise funds using various social media platforms and websites. It is primarily used to raise funds for the purpose of collecting a large amount of cash without burdening the participants; however, because of the strength of the community's participation in the social media platform, acquiring any amount of funding is quite simple. that they are able ensure a suitable sum of money. It is mostly utilised by musicians, filmmakers, artists, and others.

Crowdfunding is a method of raising funds to sponsor initiatives and enterprises. It enables fundraisers to collect funds from a huge number of people using an online platform. It is most commonly used by start-ups or expanding firms to gain access to alternative finances. It is a novel method of obtaining finance for new projects, enterprises, or ideas.

Crowdfunding Types

·      P2P lending- The audience lends money to a firm in exchange for interest. It is fairly similar to typical bank borrowing, but you borrow from a large number of investors.

·   Equity crowdfunding- The sale of an interest in a company to a group of investors in exchange for money. The concept is comparable to how common stock is traded on a stock exchange or venture capital is raised.

·  Crowdfunding with monetary incentives- Individuals contribute to a project or business with the intention of getting a non-monetary benefit, such as goods or services, in exchange for their contribution at some point in the future.

·      Individuals contribute small sums to fulfil the bigger financing goal of a specific nonprofit project while receiving no monetary or material compensation.

·     Revenue-sharing or profit-sharing- Businesses can trade future profits or revenues with the crowd for immediate capital.

·    Crowdfunding for debt-related securities- Individuals invest in a company's debt security, such as a bond.

·   Models with hybrid components- Allow firms to mix components of more than one sort of crowdfunding.

Ashida. A. P, Assistant Professor, Department of Commerce, Al Shifa College of Arts and Science, Keezhattur, Perinthalmanna