Donation based crowdfunding
Crowdfunding campaign in which there is no financial return to the investors or contributors as donation-based crowdfunding. Common donation-based crowdfunding initiatives include fundraising for disaster relief, charities, nonprofits, and medical bills.
Rewards-based crowdfunding involves individuals contributing to your business in exchange for a reward, in a form of the product or service which your company is offering. Even though this method offers investors a reward, it’s still generally considered a subset of donation-based crowdfunding since there is no financial or equity return.
In Peer-to-Peer lending, an online platform matches lenders/investors with borrowers/issuers in order to provide unsecured loans and the interest rate is set by the platform. Some Peer-to-Peer platforms arrange loans between individuals, while other platforms pool funds which are then lent to small and medium-sized businesses.
Unlike the donation-based and rewards-based methods, equity-based crowdfunding allows contributors to become part-owners of your company by trading capital for equity shares. As equity owners, your contributors receive a financial return on their investment and ultimately receive a share of the profits in the form of a dividend or distribution.
Amount Raised from Crowdfunding different models in the year 2015
The amount raised by Donation based Crowdfunding in the year 2015 is higher i.e. $14.73 billion when compared to other types of Model, peer-to-peer lending is the next model which has raised $13.07 billion funds, whereas Equity and Reward based crowdfunding has $3.78 billion, $2.41 billion amount raised in the year 2015.
According to the Securities and Exchange Board of India (SEBI) has issued laws on digital equity crowdfunding in India as “unauthorized, unregulated and illegal”.
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