What is Crowdfunding? | Understanding the 3 Primary Types of Crowdfunding

Have an idea for a product or business, but need funding? If traditional funding methods like loans or angel investors aren’t for you, maybe you should consider the crowd. Crowdfunding offers entrepreneurs and idea people a way to finance their ideas and bring them to life. But what is crowdfunding? How does it work? What type of crowdfunding is right for your project? In this video, we’ll help you answer those questions.


____Contents of this video____

00:00 – Intro
00:46 – What is Crowdfunding?
01:41 – Types of Crowdfunding
01:59 – Donation-Based Crowdfunding
02:17 – Reward-Based Crowdfunding
03:44 – Equity Crowdfunding



00:46 – What is Crowdfunding?
Crowdfunding is where a large group of people give money to a project, but how did it start in the US? How is crowdfunding today different than that first campaign?


00:46 – Types of Crowdfunding
There are three primary types of crowdfunding: donation, reward and equity. The type of crowdfunding that’s right for your project depends on a number of factors. Are you planning on offering something in return for their investment? Is your project funded out of the goodness of people’s hearts? Each type of crowdfunding relies on different ways to fund an idea or project.


01:59 – Donation-Based Crowdfunding
If you’re familiar with GoFundMe or DonorsChoose, you’re familiar with donation-based crowdfunding. This basic form of crowdfunding means that the crowd gives financially for a project and expects nothing in return.


02:17 - Reward-Based Crowdfunding
This type of crowdfunding leverages a physical (or experiential) reward in exchange for financial support. It’s used by businesses, artists and creatives to finance new ventures, ideas, concepts and products every day. It’s similar to ecommerce, but often gives creators the benefit of time to fulfill after the end of their campaign.


03:44 - Equity Crowdfunding
This type of crowdfunding is similar to Shark Tank. Here, your crowd invests in exchange for equity in the company you’re building. It’s exploded in popularity in recent years and is heavily regulated by the government.


___About Enventys Partners_____
Enventys Partners is a start-to-finish, all-encompassing product development service agency that designs, prototypes, manufactures, fulfills, crowdfunds, and markets new products and startup businesses.

We’ve raised more than $350 million for clients through crowdfunding and has been involved in the development, prototyping, launching, and/or marketing of over 2,500 products. For more than 20 years, clients have utilized the agency’s combined services to take their consumer products from napkin sketch to production.


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