Crowdfunding: How it works

Crowdfunding is the term that refers to collective financing, it means, a group of people supporting economically a project. As simple as that. this system is about helping project from your community, provide them tools to go furthers, and the dreams will come true. Take a look at all the information tips will give you to you.

What is it all about?

It is a financing system that puts people in contact with projects with people who are willing to finance them through small and medium contributions. In return, the creator gives to his contributors a concrete reward.  What is this reward?

The first thing you must have in hand is a project, an idea. If it is a product, if you have a prototype, that would be much better, it is not essential, but it will pave the way a lot.

Publishing the platform.

A project is published on the platform indicating the amount of money needed to start the project. Along with the idea, a rewarding plan is presented in which you offer to each person who contributes with money according to the amount that this one decides to contribute.

Diffusion and collection of the project.

The creator of the project has the limited term to raise the funding in which along with the platform, it spreads the idea in all possible ways.

Success.

If 100% of the requested money is reached, the money to which the co-financiers have been committed is charged at this moment, and the transfer is made, so the creator can implement the idea. After launching it, the creator of the project delivers the rewards to his/her co-financiers.

If the project does not receive 100% of the requested funding, the money raised so far is not charged from the accounts of co-financiers and no transfer is made. All this if the creator of the project has opted for the crowdfunding model that is called All or Nothing. There is another model called Everything counts where the creator of the project receives the sum that has managed to raise in the limited time.

Advantages.

Funding the implementation of ideas through crowdfunding has advantages that goes beyond the money raised. In the case of entrepreneurs who want to launch their businesses, the opinion of the co-financiers that is measured in the willingness to contribute to the implementation of the idea may be fundamental.

If the money gets to 100% collection, it can be a very clear signal of acceptance of the product, or service in the market. If you do not get to raise the requested money, it can be a sign that you have to give a twist to the idea.

The co-financiers, as the people who support projects are also called, apart from receiving attractive rewards such as an acknowledgement for the collaboration, are left with the feeling that they have contributed to something really big and important, such as culture or the creation of new work posts so demanded worldwide.