1. Money
You can opt-out at any time. Please refer to our privacy policy for contact information.

Crowdfunding

By

Definition:

Crowdfunding is one way small business owners can raise capital to start a business, launch a new product or service, or fund other company projects.

The crowdfunding process starts when an entrepreneur puts out a call for financial support to the public, typically on the Internet through sites such as Kickstarter. Supporters then pledge to fund the project with a certain amount of money, and if the total pledges received meets or exceeds the goal set, the supporters make their donation (they do not have to contribute if the goal amount is not reached).

Funds raised through crowdfunding are not paid back as they would be with a loan, but the business raising the funds will often provide free products, discounts, or other incentives to those who contribute.

Also Known As: Crowd financing
Alternate Spellings: Crowd funding
Examples:
Tim wanted to use crowdfunding to finance the expansion of his restaurant, so he posted his project on Kickstarter to ask for support.

©2014 About.com. All rights reserved.