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What is CrowdFunding ?

Crowdfunding is the use of small amounts of capital from a large number of individuals to finance a new business venture. Crowdfunding makes use of the easy accessibility of vast networks of people through social media and crowdfunding websites to bring investors and entrepreneurs together, and has the potential to increase entrepreneurship by expanding the pool of investors from whom funds can be raised beyond the traditional circle of owners, relatives and venture capitalists.

Brief History

Crowdfunding has been in picture from a very long time. Authors and publishers has crowdfunded thier projects for centuries. They would advertise the book projects in subscription or pranenumeration schemes.Once the subscription reached the intented number, they would then proceed to publish the book(s). War bonds issued during World War I and World War II is another form of crowdfunding.

Auguste Comte, a prominent French philosopher and writer also used crowdfuding concept to support his work as a philospher with public support. The fund to build the granite plinth of the iconic symbol of the modern world, the Statue of Liberty, was rasied in a fundraising campaign published by Joseph Pulitzer in his newspaper, "The New York World". The campaign successfully raised $101,091 from more than 160,000 donars, enough to complete the pedestal.

Types of crowdfunding

  1. Debt based crowdfunding
  2. Equity based crowdfunding
  3. Reward based crowdfunding
  4. Donation based crowdfunding