What is Crowd funding? and how can crowdfunding fulfill your dreams!

Azad Technical January 26, 2019 No comments

What is Crowd funding? and how can crowdfunding fulfill your dreams!

Have you ever heard of crowdfunding? What kind of funding is this and how is it different from common funding? If you are using Social Media, then then you will have heard about this word Crowdfunding. This is a very innovative idea for any startup or company, or for any work in which funding is required. With the help of more internet, this innovative idea is reaching more and more people with the help of internet, so that more people are now connecting with it.

Crowdfunding is a very familiar name in the world of funding. Many people do not have complete knowledge about it, so today I thought to give  information about Crowdfunding to people and how useful it is, so that you will not have to ask anyone about it. Then, without delay, let's start and know

What is CrowdFunding?


In Crowdfunding  money is taken from a group of people to complete a project. People who invest their money here know this well and why they invest their money. Generally, it is only for a particular cause.

This is one of the ways to raise money where Facebook and Twitter or other crowdfunding-dedicated websites like internet and social networking are fully used. Small businesses and startups help in improving, with this, more and more people will learn through social media, which will increase their investment base, and funding prospects.

Crowdfunding is not a new concept as it was already indigenous in another form in our country. Chanda, for example, which we choose from people around us in the event of a festival. That makes it easy for people to do any social work. Along with it, they also use movies, social causes, and music festivals. It is surrendered in many models such as peer to peer lending from peer. What are the main components of crowdfunding.

If we talk about the modern crowdfunding model, it's mainly three vital parts. Project Initiator, Supporters, Platform Wherever  Project Initiator  is the work that they propose, i.e., tell people about their project. The second is  supporters  which can be either individual or groups whose main work is to correctly understand and support the Idea, and the third and last part is correct Platform  which gives the opportunity to launch that idea in front of the right people, so that these three parts can meet that idea.

Types of CrowdFunding

If we talk about types of Crowdfunding then there are many types of Crowdfunding in india such as debt based, equity-based, cause-based, reward based, software value token, donation based, litigation, etc.

  1. Equity-based crowdfunding. In this type of crowdfunding, investors invest large amounts of money most of the time in order to get a big piece equity in that startup. Most of the time, for the growth of equity-based crowdfunding company. This kind of crowdfunding has been considered illegal. SEBI (Securities and Exchange Board of India) is one such stakeholder who can frame guidelines for making it legal.
  2. Reward-based crowdfunding. This type of crowdfunding is very rare for you. As you can understand by name, the investor gets a tangible product in exchange for his investment. For example if you are a startup of digital watches then you have to give your investors an end in the form of digital watches. It is completely legal in India.
  3. Donation-based crowdfunding. In this type of Crowdfunding donors can donate according to their own noble cause. These donations can be of any amount. Here donors do not get any reward as was done in Reward based. It is completely legal in India. Here donors donate heartily for the good of our society. For example Ratan tata who donate a lot in time to time.
  4. Debt-based crowdfunding. In this type of crowdfunding, you invest in the company's security (also called debt instrument) where your motive is to give your money to the company according to the loan And in return the company will return the specified interest rate to you. There are two types of debt instruments with it secured and unsecured debt instruments. Interest rates are also generally associated with their level of risk associated with any particular startup or entity. This is legal in India.
  5. Public-Private Partnership (PPP). which is based on equity-based model, it is mainly practiced in crowdfunding of India

Famous Crowdfunding platforms

Wishberry, Milaap, Miracle Foundation, Rangde CrowdCube and Seedrs who are performing very well in India. Wishberry funds work for creative artists The same Milaap works primarily for charities. Miracle Foundation mainly orphans Or works for orphans. RangDe is an internet-based peer-to-peer micro-lending platform which provides low-cost loans to rural entrepreneurs throughout the country, so that they can do their work in a good and smooth way. Finally, CrowdCube  are internet platforms that help small companies to issue shares. These Shares provide those registered users who have invested some good returns in those companies.

With this, many such platforms have also been raised which are designed to give more funding in the Scientific projects, one such Crowdfund is experiment.com and the other is The Open Source Science Project. 

What are the benefits of crowdfunding? 

By the way, Crowdfunding has many benefits, but I have tried to introduce something important to you here.

  1. This process is not more dangerous due to Crowdfunding, with no formal banking system. 
  2. This is a very efficient system and it takes a very short time. 
  3. This increases the productivity of innovation and entrepreneurship to a large extent. 
  4. With its help, small Small enterprises can grow well if found correct guidance. 
  5. This makes business strategy a lot easier. 
  6. There are so many applications like this, creative work such as blogging, journalism, music, independent film, and startup companies get funding to work further.
  7. This is a very good way to return something to the society. 
  8. This creator allows the low-cost capital to attain. 
  9. More publicity than Crowdfuding, better customer base, And soon it's easy to get good employees. 
  10. This provides a good platform for donating and investing to people, so that the right thing can reach the right people.
  11. It does not consider caste and gender discrimination and looks at all the people with equal vision, thereby equality in society.
  12. It earns inflation These platforms earn search and transaction costs, so that they can participate in the market by better crying. 
  13. This opens the doors of good and neglected markets for individual investors. 
  14. With the help of investors, the value of companies increases, and with that they add value to the companies.

What are the demerits of crowdfunding?

As we all know that there are two aspects of everything, just like Crowdfunding has two aspects: one of its benefits which we already know, let's now understand what its main demerits are. 
  1. It is a bit risky for new small-scale investors and entrepreneurs, and because of which they fail most of the time in this new venture.
  2. There will be danger of reputationalization If you can not reach goals and targets in the right time, then work in generating this interest. It does not happen because it can also cause a public failure.
  3. Intellectual Property (IP) protection can also be debated by the creators who are engaged in crowdfunding because they have to show in front of their final product in front of the entire public, which has a very high risk of copying 
  4. There is also a risk that if the same network of supporters are repeatedly approached, then campaign can not get the right support, which can later become a big failure too. . 
  5. Because it is not within any regulatory framework So afraid of the public misuse is always felt.
  6. Because there is no formal banking system in it, there is more chances here that there is more fraud and money laundering here. 
  7. There is also a danger of creditworthiness and enforceability here. 
  8. There is always lack of expertise here, because the novice's ration remains low. 
  9. As we know that the startup sector in India is still immature, hence failure here The chances of being too much are.

How Crowdfunding Can Be Made a Success?


If Crowdfunding is to be fully successful then some things will have to be seen in particular.
Complete transparency and accountability to reduce Fraud and illigal activities such as 
  1. It is mandatory to have social media. It should be used to spread awareness. 
  2. It should always be noted that the money reaches the right people and at least the people Come in contact. 
  3. All the details should be properly documented so that the accumulated funds are not misused. 
  4. Support Crowdfunding and Entrepreneurship There should be laws in India.
  5. People should change the view of Crowdfunding. 
  6. The belief about private entities should be changed that they are not fully profit oriented.

If it is to make Crowdfunding successful in India, then a pro-business environment must be established.

I  hope that I have Given full information about crowdfunding and hopefully you guys will have come to understand about what is Crowdfunding. I am convincing of all the readers that you too share this information with your neighbours, relatives, friends, so that we will be aware of our interactions and this will greatly benefit everyone. I need you people's support so that I can bring you even more new information.I always help my readers or readers on every side, if you have any doubt of any kind, then you can ask me unexpectedly. I will definitely try to solve those Doubts. What is Crowdfunding This Article? How did you feel like writing a comment, so that we too can get a chance to learn something from your thoughts and improve something. In order to show your happiness and excitement towards my post, please share this post on Social Networks such as Facebook, Google+ and Twitter.

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