💰 Money School
Crowdfunding Explained
Crowdfunding explained in plain terms. Learn the main types, how reward and equity campaigns differ, and what it really takes to run one that succeeds.
What you will learn
- 1Beginner: The Types of CrowdfundingFree 6 min
- 2Intermediate: Running a Campaign That Works🔒 9 min
- 3Advanced: Crowdfunding as Strategy🔒 9 min
Beginner: The Types of Crowdfunding
What crowdfunding is
Crowdfunding raises money from many people, usually online, each contributing a small amount toward your goal. Together those small amounts can add up to real funding.
The key question is what the backer gets back. That answer is what separates the different types of crowdfunding.
Reward and donation crowdfunding
In reward crowdfunding, backers give money and receive something in return, often the product itself before it is widely available, or a perk. It works beautifully for physical products and creative projects.
In donation crowdfunding, people give to support a cause and expect nothing material back. This is more common for community efforts and personal causes than for building a company.
Equity and debt crowdfunding
In equity crowdfunding, backers get a small ownership share of the business, like tiny investors. This is regulated and more involved than rewards.
In debt crowdfunding, sometimes called peer lending, the crowd lends you money that you pay back with interest. Each type has different rules and different obligations to the people who backed you.
Do this before lesson 2
- ✓Decide what you could realistically offer backers in return.
- ✓Match your idea to the crowdfunding type that fits it best.
- ✓Look at two finished campaigns like yours to see what backers expected.
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