Crowdfunding is a way to raise funds by collecting small contributions from a large number of people, typically via online platforms. While the concept dates back to charity drives and limited partnerships in the 20th century, the internet has revolutionized it by lowering costs and expanding reach.
The four main crowdfunding models are:
- donation-based (no financial return)
- reward-based (backers receive a product or perk)
- equity-based (investors buy shares in a company)
- lending-based (peer-to-peer loans).
Platforms like Kickstarter, Indiegogo, and LendingClub have driven its growth, offering new opportunities for entrepreneurs and investors.