Crowdfunding is the raising of funds by people who need a certain amount for humanitarian causes or the need to develop a business, raising funds from many people. This system is conducted online through a crowdfunding platform or social media.
Types of Crowdfunding
In general, there are four types of crowdfunding that can be done. There are the following types of crowdfunding:
1. Donation Crowdfunding
This type of crowdfunding uses a donation system to collect company funds. As the name suggests, donation crowdfunding investors do not ask for a return of capital and make company capital available as a donation.
2. Crowdfunding Rewards
Reward crowdfunding is a form of crowdfunding that offers attractive prizes or rewards to investors who provide funds to companies. The rewards or prizes offered may be in the form of money, goods, special services or other prizes.
3. Equality Crowdfunding
This type of crowdfunding offers shares to investors. Although a fairly complicated system, equity crowdfunding can provide great business capital.
4. Debt Crowdfunding
Debt crowdfunding is done through a peer-to-peer lending system or debt system. This means that the refund must be made plus interest and according to the term specified in the mutual agreement.
How does crowdfunding work?
1. Make suggestions
The first thing you need to do is make a business proposal. Make sure you prepare an informative and attractive business proposal. So that the information you provide in the offer will be well received by those investing funds in your business.
2. Registering proposals on crowdfunding platforms
The next step is to register the proposal on the crowdfunding platform. However, make sure you choose a trusted platform with official regulations so that the fund transaction process can be carried out safely.
3. Monitor the progress of the offer
After that, you need to monitor the progress of the funding process on the platform. When a crowdfunding platform organizes questions about your business, they are immediately answered with clear answers.
4. Receiving Funds from Investors
For investors interested in buying sukuk or shares of a company, the steps are to invest as you wish. The benefit to investors is in the form of returns or dividends paid out over a specified period of time. For example, every three months, every six months, even once a year.
Reporting on the use of funds and preparing returns on investments and returns/dividends
Of course, recipients of funds intended to finance a company or project are obliged to prepare a report on the use of the funds. As well as generating returns on capital and income/dividends in accordance with the agreed cooperation agreement.
What are the benefits of crowdfunding?
In addition to providing access to a larger and more flexible network of investors, crowdfunding also offers a number of benefits, including:
1. Extend range
Using a crowdfunding platform gives you broader access to thousands of accredited investors who are ready to view, interact with and share fundraising campaigns.
2. Opportunity to present your company
Crowdfunding allows you to explain your business through a prospectus that investors analyze before deciding to invest, highlighting the business you are building. You can start with the story, the appeal, the target audience, etc.
3. Support your company’s branding activities
Your business is also supported by a fundraiser from investors across platforms and social media from crowdfunding organizers. So that it can be known to a larger community in order to be able to offer new business opportunities and public trust.
In summary, crowdfunding is a collective method of raising funds or corporate capital that offers many benefits to businessmen and investors. The types of crowdfunding are very diverse and can be customized according to business needs.