All About Crowdfunding
What is Crowdfunding?
Crowdfunding is a pretty simple - yet often misunderstood - concept. It basically describes funding an individual, business or charity’s project or venture, by raising small sums of money from a large number of people.
People generally invest or donate money to crowdfunding projects that interest them, for some eventual return or reward.
There are different types of crowdfunding: donation-based, reward-based, investment-based and loan-based crowdfunding. The most widely known variant, investment-based crowdfunding, means you receive a stake in the business you’re investing in.
How Does it Work?
There are three main parties involved when it comes to crowdfunding: the project initiator, the investors and the moderating platform, such as Crowdcube.
Prospective investors are able to view project pitches on the moderator’s website, to find out all the relevant information about the company or venture they’re considering investing in. The important details you should be looking out for include:
- How much it’s looking to raise/how much it’s raised so far
- How many people have invested so far
- What the money will be used for
- What you’re being offered for investing
Saving the Land of the Free
Crowdfunding has been around longer than you may think. The 19th-century newspaper publisher, Joseph Pulitzer, launched a five-month campaign to fund the completion of the Statue of Liberty in 1885. He launched the campaign - one of America’s first ever crowdfunds - in his paper, The World, which chronicled each donation, donor’s name and gave a running total.
Pulitzer’s plea to “not wait for the millionaires to give us this money!” touched thousands of people’s hearts and he managed to raise over $100,000 - more than enough to save Lady Liberty.
Saving the World
While the above example was certainly worth investing in, it still pays to do your own research into a project and make sure you know all you need to know about it. People tend to be sceptical when faced with any unsubstantiated, bold claims - regardless of whether they’re true or not.
In 2015, a non-profit organisation called the Emergency Asteroid Defense Project tried to save the world through crowdfunding, by trying to develop a special spaceship to protect Earth from asteroids. Whether it’s a scientifically-sound idea or not we may never know - the organisation only reached 4% of its target. Perhaps if more simple, verifiable facts were on hand, more people would have got involved.
A Story of Success
Two friends who manufacture tiny 3D printers together managed to raise an enormous $3.4 million for their company M3D in 2014. Their micro 3D printer is now available to buy pretty much anywhere.
And there are plenty more success stories like this one. When presented with the right information, crowdfunding can be an easy and rewarding way of getting involved in a product or cause you believe in.
Join the Wirex Journey
You may have heard - we’re crowdfunding! At Wirex, we’re on a mission to make all currencies equal, and to build a world where buying, holding, saving and spending any digital and traditional currency is quick, easy and accessible.
We want you to join us on our mission. So, from Monday 28th September we’re giving you the chance to own a stake in the brand before we scale-up.
Find out more and register your interest here.