What is CrowdFunding? – 10 Things you should know about CrowdFunding

1. Crowdfunding is the process of funding your projects by a multitude of people contributing a small amount in order to attain a certain monetary goal. Goals may be for donations or for equity in a project.

2. Crowdfunding is fueled by three types of actors: the project initiator who proposes the idea and/or project to be funded; individuals or groups who support the idea; and a moderating organization (the “platform”) that brings the parties together to launch the idea

3. In 2013, the crowdfunding industry grew to be over $5.1 billion worldwide

4. Reward-based crowdfunding: entrepreneurs pre-sell a product or service to launch a business concept without incurring debt or sacrificing equity/shares.

5. Equity-based crowdfunding: the backer receives unlisted shares of a company, usually in its early stages, in exchange for the money pledged. The company’s success is determined by how successfully it can demonstrate its viability.

6. The inputs of the individuals in the crowd trigger the crowdfunding process and influence the ultimate value of the offerings or outcomes of the process. Each individual acts as an agent of the offering, selecting and promoting the projects in which they believe. They will sometimes play a donor role oriented towards providing help on social projects. In some cases they will become shareholders and contribute to the development and growth of the offering. Each individual disseminates information about projects they support in their online communities, generating further support (promoters).

7. As of 2012, there were over 450 crowdfunding platforms globally.

8. Project creators need to do their own due diligence in order to understand which platform is the best to use depending on the type of project that they want to launch

9. The highest reported funding by a crowdfunded project to date is Star Citizen, an online space trading and combat video game being developed by Chris Roberts and Cloud Imperium Games, which—as of 10 March 2014—claimed to have raised USD $40,000,000, beating the previous record of $10,266,844 set by Pebble Watch

10. Thundafund is South Africa’s biggest crowdfunding platform.