An increasingly popular method of raising money for businesses, projects and ideas. It is conducted via online platforms, where pledges can be made and collected. Unlike traditional fundraising where funds are typically derived from one or a few sources, crowdfunding typically raises many small sums from a large group of individuals (the 'crowd'). For fundraisers, it has the added advantage of cultivating a community around their offering, which may result in useful insight and access to new customers. Within equity crowdfunding, investors – as with traditional equity investing – are buying a stake in a business, with the potential for that stake to rise or fall in value. Typically, companies raising money are start-ups, which carry a high level of risk for investors.
There are many other types of crowdfunding, including peer-to-peer lending, donation-based crowdfunding (charity fundraising) and debt crowdfunding (investing in debt issued by a company, much like a bond).