Also known as massive funding, is an increasingly popular alternative to obtaining financing.
It relies on the presentation of a project to the public, usually through websites devoted to this purpose, getting funding from the donations of people interested in the project.
This system is generally used to finance original ideas, which people see as beneficial and/or useful for themselves. As well as promote entertainment products like games.
Everyone has the ability to publish their project. This may offer an option for the future when the studies are completed for those who lack the means and want to undertake.
- Basic Crowdfunding: Individuals bring their money without expecting anything in return.
- Equity crowdfunding: The company makes a round of public funding and in return, if success is achieved, the company distributes shares among the contributors.
- Trading crowdfunding: For the production of an object, such as a book or watch, once the project is completed all contributors receive a copy.
Many states have expressed their concern because this funding method makes it possible to finance a project without borrowing from banks, so they pretend to limit it.
In Spain it has been decided to limit the contribution of investors to 3.000 € for a single project and 6.000 € over a period of twelve months. Although investors can contribute up to 10.000 € if they have a large income and net worth. In theory this measure is designed to protect investors.
It has also been decided to limit the maximum funding that a project by crowdfunding can get to one million euros, although in foreign countries has reached ten times that figure. Fortunately this measure will not apply to the basic crowdfunding or trading crowdfunding.
One of the major motivations of crowdfunding is to support creative projects which do not fit the standards required from companies that currently control the capital. Thanks to investors, projects with no future are feasibly promoted by society. It is a great contribution to the culture. The only downside is that there is a risk for the developer: his idea may be copied.
Kickstarter - For creative projects by artists, filmmakers, designers and programmers in general.
GlobalGiving - For charitable and philanthropic projects.
gofundme - General, for personal projects, groups or organizations.