What is Crowdfunding?

Collective financing, currently better known as crowdfunding, occurs when someone, or a group, wants to raise money from people who are willing to collaborate on a project.

This method of fundraising uses wide dissemination so that interested people can learn about and donate to the project. For this, the media such as television, radio, music concerts and the most popular today are used on the Internet.

Crowdfunding  on the Internet has become better known for its crowdfunding expression   in English or even for the more popular term “Vaquinha Online”.

Through crowdfunding sites, anyone who has a project must create a fundraising campaign stating the amount needed and how long it should be active, which, if approved, starts receiving donations.

To receive donations from interested persons, the project must be well presented, with well-defined objectives and wide dissemination.

Types of existing crowdfunding campaigns

There are 4 types of campaigns for Crowdfunding today: donation, reward, equity crowdfunding and debt crowdfunding.

1. Donation (campaign without reward)

The donation drive, also known as a no-reward drive, is run primarily by charities and other groups that support wellness causes.

2. Reward

The most common type of crowdfunding, where project creators offer a reward to donors.

3. Equity crowdfunding

In this type of Crowdfunding, the contributors are seen as investors, in which the money is invested to obtain profits from the project, especially in Startups.

4. Debt crowdfunding

This financing works as a type of “loan”, since the amount of the donation is repaid after a time, with additional interest.

Crowdfunding modalities

There are also two types of Crowdfunding to choose from, known as: ”  Tudo ou Nada  ” and ”  Flexible  “.

Through the “Tudo ou Nada” campaign, the project creator chooses the minimum amount that is necessary for his project. If this amount is not collected within the stipulated time, the site returns all money to the donors and no fee is charged.

Otherwise, through the “Flexible” campaign, even if the minimum is not collected, at the end of the term, the money is delivered to the creator, where the fees for each site are also charged.

The first campaign is recommended for those who really need a minimum amount of investment for the project, and the second for those who need any amount for the project.

Examples of successful crowdfundings

One of the most successful fundraising examples was the US company Oculus VR, which in 2012 raised more than $ 2 million to invest in the virtual reality glasses project.

The M3D company carried out another example of successful crowdfunding, which in 2014 raised more than $ 3 million for the design of a low-cost portable 3D printer.

The two projects ran their campaigns on the US website Kickstarter, known as the  world’s largest crowdfunding site  .