What is CrowdFunding?

How network funding or patronage works?

Formally the definition of Crowdfunding   is that system of financing and cooperation in which a number of companies or individuals invest with the objective of uniting a certain amount of resources in a project or initiative involved. To develop this concept should mention two main approaches on which the model of collective funding originates. The weak global economic environment has meant a decline in credit in general and the rise of social networking sites in internet that allow the participation of small and large investors.

 

Source : bbc.co.uk

The loans to groups of low-income communities located in the same geographic location for Trust Banks are not new, there are many financial institutions sponsored by governments or non-profit organization to develop funding programs to groups of 4-20 or more individuals through a form of shared responsibility in which each participant signed as guarantor for others as there is no actual physical collateral to back the loan. The amounts owed are usually very low and assigned to people with no experience in the financial sector and can not access a fast cash loan .

 

Furthermore the increasing use of technology and the Internet has facilitated access to information networks that create an ecosystem where electronic resources and initiatives are provided by various participants and allows the deployment of projects of all kinds . One of the key features is the remote location between them providing the appropriate mechanism to share common interests and immediate information to thousands of miles away . This same feature implicitly displays a top finance claiming minimizing risk in any rational investment, distribution. Logically risk aversion on the part of large financial institutions is an outlet to have a funding provided by multiple investors and parallel figures actually achieved considerable investment that the traditional funding model were difficult to achieve.

Crecimiento de Usuarios de Internet y suscriptores  de banda ancha.

source: google.com Elaborated by : libreinformacion.com

According to the Crowdfunding Industry Report (www.crowdfunding.nl) in 2012 there were approximately 450 crowdfunding platforms worldwide, with the U.S. leader with more than 100 entities. Additionally they have a regulation that facilitates these mechanisms of value creation.

CrowdFounding Report 2012

CrowdFounding Reporte 2013 

Some of the most renowned projects that have resulted from crowdfunding platforms is the British rock group Marillion. In addition President Obama of his campaign finance it through a digital marketing strategy supported by crowdsourcing. 

The most popular platforms today are Indiegogo and kickstarter