Crowdfunding lets you raise money from the crowd instead of a single investor or bank. Through online platforms, thousands of people contribute small amounts ($10-$10,000) to fund a project, product, or business. It democratizes access to capital — anyone with a compelling idea can seek funding.
Four main types: reward-based (Kickstarter, Indiegogo) — backers get the product; equity-based (SeedInvest, Crowdcube) — backers get ownership shares; donation-based (GoFundMe) — for charitable causes; and debt-based (LendingClub) — peer-to-peer lending. Kickstarter alone has funded over 250,000 projects raising $7+ billion.
The Pebble smartwatch raised $10.3 million on Kickstarter in 2012 — one of the most successful campaigns ever. However, crowdfunding carries risks: 9% of Kickstarter projects fail to deliver. Regulatory frameworks like the JOBS Act in the US now govern equity crowdfunding to protect small investors.