Pros And Cons Of Crowdfunding

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Question 1.

What is equity crowd funding? How does equity based crowd funding differ from non equity based crowdfunding?
Before going for Crowdfunding, we need to understand alternative financing.
Alternative financing is the way of funding the startups or new ventures (relatively more risky) by any other ways than any conventional methods as prevalent. This type of financing is generally resorted to when it is not possible to raise funds through any traditional type of finance instruments or any type of financial channels.
Crowdfunding is one example of such alternate financing. Under Crowdfunding, as the name suggests, funds are raised from large no of people, generally through online platforms.
There are three vital components of the Crowdfunding, which are;
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The examples of Crowdfunding will include:
1) Philanthropic projects
2) Real Estate projects
3) Intellectual property related projects etc.

Pros and cons of the crowdfunding:

Crowdfunding has been resorted to even when internet was not existent like in case of Statue of Liberty, when Government lacked to finance, the small newspaper campaigns raised money from a large no of people.
Now with introduction of modern technology & developments in global economy, crowdfunding is seen as most accessible resource for financing for e.g. Kick starter Platform which raised almost $ 1.2 million in 2012 for making a music album for Amanda Palmer

Comparability with other forms of alternative financing :
As mentioned above , crowdfunding is one of the alternative financing methods.There are also other forms of alternative financing as well.Lets compare all of these with Crowdfuding

Types of