What are the types of crowdfunding?



10:35 AM on October 10, 2022

There are four types of crowdfunding: debt, donation-based, equity, and rewards-based.


Debt Crowdfunding 💰

Also known as crowdlending, this is a way of aggregating funds for a fundraiser's debt requirements through a crowdfunding platform. Payment of the principal plus interest is made to the platform, who will then distribute it back to the individual investors.

Examples: Funding Circle, Lending Club


Donation-based Crowdfunding 💌

This is a means of raising funds for no financial return. The contributors are purely donating to a campaign usually geared towards disaster relief, charities, nonprofits, and medical bills.

Examples: Kickstarter, GoFundMe


Equity Crowdfunding 👯

Sometimes called crowdinvesting, this is a way for companies to raise funds by selling company shares or securities, thereby allowing investors to become part-owners of the company. As shareholders, investors are entitled to receive dividends when the company earns a profit.

Examples: Seedrs, AngelList, CircleUp, EquityNet


Rewards-based Crowdfunding 🎁

This is similar to donation-based crowdfunding, where individuals contribute funds to a business. In return, a “reward” is given by the fundraising company. These rewards usually come in the form of a product or service the company offers, but they can also take on any form as long as it is not monetary.

Examples: Kickstarter, Indiegogo, Crowdfunder UK, Pozible