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What is crowdfunding?

He Crowdfunding for companies is a type of project financing that is based on the collaborative economy. These transactions are usually carried out through online platforms where the applicant publishes his project and according to the feasibility and the interest that people arouse, they will be able to make their contribution to the project in the amount they decide.

The project collaborators They do not receive a monetary reward for the investment, but instead receive rewards as the pre-purchase of the product, a special thanks on the project website or certain privileges when it is fully developed.

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Obtain the necessary capital for the project

Know in advance if it can be successful or the pertinent changes that are necessary

Extensive control of the evolution of the project by managing daily investments

Fast and secure financing thanks to the use of the Internet

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How does crowdfunding work?

As we have seen in the first definition, this financing consists of the crowdfunding of an innovative project through transactions of people who selflessly contribute their donations to the development of said project.

These donations are made through platforms created in Internet where the project creator posts his need. If the project attracts the attention of the people who seek to provide this help and its development also seems viable, they will make the donation through the platform that has been used for the amount they wish. But it does not necessarily have to be a monetary contribution, but sometimes other types of elements can be provided, such as material necessary for the development of the project.

project collaborators, in exchange, they do not receive a monetary reward, but instead receive some kind of reward such as enjoying certain privileges when the project is developed, being able to access a pre-purchase of the product or simply a special thank you mention on the project website.

Once the financing starts, two things can happen. In the first place, in the case of obtaining the 100% of the financing that has been requested, a transfer is immediately made to the creator of the project and they receive the money, but in the event that the entire amount is not obtained, it may be that the creator of the project do not receive any of the money that has been donated (“All or Nothing” model) or that you receive only the amount that has been collected (“Everything Counts” model). All this depends on the crowdfunding modality that has been chosen.

Existing ways of doing this type of financing are the following:

  • Of donations: Contributions are made without expecting any kind of benefit in return.
  • Of rewards: Contributions are made voluntarily, expecting some type of reward in return, which does not necessarily have to be monetary.
  • Of Actions: participation in the project receives in exchange for receiving shares or shares of the company.
  • Of loans (crowdlending): financing through loans in exchange for receiving the payment for the fixed interest rate.
  • Of royalties: project participants expect to receive at least a symbolic amount of the benefits reported by the project.

The most important thing about this financing, it is if the project goes ahead, these donations are the best way to know who your target audience is and how you can focus on them or even the possibility of opening up to other markets. that is, it is a good way to study how your project will turn out. Thanks to this, you can obtain great information and you can even carry out a test prior to launching the project with your investors, since they are the most interested in the result being successful.

Advantages of Crowdfunding

  • If the project is attractive, it is easy to get the necessary financing. If this is not the case, there will be no monetary losses
  • Thanks to the fact that investors are the people who are interested in the project being carried out, it is easy to know the success it can have and the pertinent changes that need to be made.
  • You can consult the money that the project receives daily, so you have a wide control of its evolution
  • The procedures are carried out through internet platforms, so it is a fast and secure way of financing

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