Crowdfunding VS Crowdinvesting
If you still don't know the difference between crowdfunding and crowdinvesting, this prompt is for you!
Crowdfunding (a combination of "crowd" and "funding") is a collective collaboration of people who voluntarily unite their money or other resources to support the efforts of other people or organizations.
The first known example of crowdfunding is considered to be raising $60,000 to organize a tour of the British rock band Marillion around US cities in 1997. Later, raising voluntary donations via the Internet for shooting films and developing the film industry started to gain popularity.
- People fund projects of companies or other people
- Projects can be not only commercial, but also social: publishing a book or releasing a music album, shooting a movie.
- People receive benefits for their financial contribution: the author's book, a CD with the music album, the final developed product
- No monetary refund or material benefits are provided.
Crowdinvesting (a combination of "crowd" and "investing") is an alternative financial tool for attracting capital to startups and small businesses from a wide range of micro investors. Anyone can invest a small amount and become an investor in order to make a profit from their investment in the future.
- People fund projects of companies
- Investments are channeled only into potentially successful commercial projects
- Investors receive a share in the future company for their contribution
- When the company reaches self-sufficiency, investors get their share of the profit.