Crowdfunding
Crowdfunding
A way to raise money from a large, open group of people over the internet.
In Simple Terms
Crowdfunding is a way to pitch your idea online and collect small amounts of money from lots of people who like it. It's often used when you have a great idea for a new product but no money to develop it — you raise funds in advance to help bring it to life. There are different types: some send supporters a thank-you gift in return, while others are pure donations with nothing expected back.
Behind the Name
It's a blend of the English words "crowd" and "funding" — literally, gathering money from a crowd of people. The name says exactly what it does: bringing together funding from a large number of people.
Take a Closer Look!
Crowdfunding is a way to raise money from a large, open group of people over the internet.
Someone with an idea — "I want to make this product" or "I want to help disaster victims" — posts their project on a dedicated website and asks people to support it.
Broadly, there are a few types: "reward-based" crowdfunding, where supporters get a thank-you gift or service in return; "donation-based" crowdfunding, which is pure giving with nothing expected back; and "investment-based" crowdfunding, where financial returns are shared with backers. Reward-based campaigns are often used as a way to "pre-order" a brand-new product or service before it even exists.
Supporters also get to enjoy following along as the project comes to life.
Thanks to the internet, even a small personal idea can now reach a huge audience, making it possible to raise money even when getting a loan from a bank is difficult.
Because backers can follow a project's progress on social media and elsewhere, crowdfunding creates more than just a funding relationship — it builds a sense of cheering the project on together.