Essay On Crowdfunding

1523 Words7 Pages

Crowdfunding occurs when founders want to fund their ventures through small contributions of people by a large number of individuals, without going through standard financial intermediaries, like the bank or moneylenders, by using the internet. This is made possible by two elements:
1. Substantial reduction of transaction costs, as the money is directly transferred. The contributions of many small sums results in a large amount.
2. There is a direct connection between funders who are seeking capital and the crowd, with no in-between. This is made possible by the Internet.

Crowdfunding was inspired by the idea of crowdsourcing and micro-financing. Successful Crowdfunding is associated with the underlying project as well as the personal
…show more content…
They are:
1. Goals of the Project: The amount of capital needed to be raised. The all or nothing model followed by Kickstarter is the dominant approach used by almost all crowdfunding websites. The founders should have realistic goals. High project aims may make the project harder to succeed, and a low project capital may make the project hard to complete.
2. Level of Funding: The amount of a project that is raised by the founders. Projects that achieve their desired capital are successful projects. They are given the total amount they raise by their crowdfunding website. Overfunded projects are those that raise more capital than they intended.
3. Backers: Backers are the n umber of people who have funded and provided capital to the project.
4. Pledge/ Backer: The amount of money provided divided by the number of backers results in the average pledge of the backers. The personal pledges of each individual backer is not known.
5. Category: The website Kickstarter divides its projects into different categories. These categories include Books, Art, Comics, Design and Technology, Music, Dance and so on. Design and Technology products usually offer concrete products as rewards. They have to provide the website with a definite delivery date and a plan showing their manufacturing

More about Essay On Crowdfunding

Open Document