Crowdfunding Access

What is Crowdfunding?

According to Kirby and Worner (2014), can be defined as the use of small amounts of money, obtained from a large number of individuals or organizations, to finance a project or other needs through an Internet platform. In other words, it is when a group of people pool resources for a purpose.

Crowdfunding has become a tool and an opportunity to facilitate the rapprochement between societies and the projects it supports.

Anyone with an idea can test the reaction of the masses and pitch it to them. It is equally important to note that not only do we achieve the expected funding, but also build communities around the projects and create new models of participation.

But this collaborative economy phenomenon is not new and has its years, in fact in 1984 one of the most iconic projects in history ran out of funds to finish. It was none other than the Statue of Liberty. Thanks to publisher Joseph Pulitzer, spokesman for the campaign, and 125,000 people, more than $100,000 was raised to finish the statue. And this was not the first nor the last project funded in this way.

The most successful, for the moment, is the rewards model. However, in recent years the share-based model has grown rapidly and this is where the combination of crowdfunding and Security Token Offering comes in.

Let’s see an example: Once a project is tokenized, tokens representing the value of this real asset can be developed and generated by a smart contract. Following the crowdfunding proposal, the project can be divided into tokenized shares. Thus each participant in these crowdfunding campaigns would receive their participation tokens equivalent to their investment.

Security Token Offering gives a more secure and regulated approach to Crowdfunding by being involved with Blockchain and following the protocols, requirements and financial regulations established by the competent authorities. They also allow global access to platforms with projects all over the world, and provide the transparency, security and trust that investors/participants are looking for.

Currently there are 4 general types of crowdfunding:

Donation:
Just as its classification says, the contribution is made through a donation and the motivation of the funder is more intrinsic and social since the return is about a moral intangible benefit.

Reward:
In this type of crowdfunding the contribution is made through a donation or a pre-purchase. The funder feels an intrinsic and social motivation but receives as a benefit some kind of reward. Some campaigns of this type usually give their contributors some samples of their products, discount coupons or even a gift of appreciation for the participation and donation.

Loan:
The contribution is made by means of a loan. The funder’s motivation is a combination of intrinsic, social and financial, as he/she expects as a return the repayment of this loan with interest.

Shares:
Like the loan, the funder’s motivation is a combination of intrinsic, social and financial with the difference that the contribution is considered an investment and the return is the ROI obtained over time if the business does well.

 

Articles

What is Crowdfunding?

According to Kirby and Worner (2014), can be defined as the use of small amounts of money, obtained from a large number of individuals or organizations, to finance a project or other needs through an Internet platform. In other words, it is when a group of people pool resources for a purpose.

Crowdfunding has become a tool and an opportunity to facilitate the rapprochement between societies and the projects it supports.

Anyone with an idea can test the reaction of the masses and pitch it to them. It is equally important to note that not only do we achieve the expected funding, but also build communities around the projects and create new models of participation.

But this collaborative economy phenomenon is not new and has its years, in fact in 1984 one of the most iconic projects in history ran out of funds to finish. It was none other than the Statue of Liberty. Thanks to publisher Joseph Pulitzer, spokesman for the campaign, and 125,000 people, more than $100,000 was raised to finish the statue. And this was not the first nor the last project funded in this way.

The most successful, for the moment, is the rewards model. However, in recent years the share-based model has grown rapidly and this is where the combination of crowdfunding and Security Token Offering comes in.

Let’s see an example: Once a project is tokenized, tokens representing the value of this real asset can be developed and generated by a smart contract. Following the crowdfunding proposal, the project can be divided into tokenized shares. Thus each participant in these crowdfunding campaigns would receive their participation tokens equivalent to their investment.

Security Token Offering gives a more secure and regulated approach to Crowdfunding by being involved with Blockchain and following the protocols, requirements and financial regulations established by the competent authorities. They also allow global access to platforms with projects all over the world, and provide the transparency, security and trust that investors/participants are looking for.

Currently there are 4 general types of crowdfunding:

Donation:
Just as its classification says, the contribution is made through a donation and the motivation of the funder is more intrinsic and social since the return is about a moral intangible benefit.

Reward:
In this type of crowdfunding the contribution is made through a donation or a pre-purchase. The funder feels an intrinsic and social motivation but receives as a benefit some kind of reward. Some campaigns of this type usually give their contributors some samples of their products, discount coupons or even a gift of appreciation for the participation and donation.

Loan:
The contribution is made by means of a loan. The funder’s motivation is a combination of intrinsic, social and financial, as he/she expects as a return the repayment of this loan with interest.

Shares:
Like the loan, the funder’s motivation is a combination of intrinsic, social and financial with the difference that the contribution is considered an investment and the return is the ROI obtained over time if the business does well.

 

Articles
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