hmu.ai
Back to Startup Dictionary
Startup Dictionary

Crowdfunding

Definition

Funding a project or venture by raising small amounts of money from a large number of people.

Deep Dive

Crowdfunding is an innovative method of raising capital for a project, venture, or cause by soliciting small amounts of money from a large number of individuals, typically through online platforms. It democratizes the fundraising process, allowing entrepreneurs, artists, and innovators to bypass traditional financial gatekeepers like banks or venture capitalists. This approach leverages the power of collective effort and widespread participation, often enabling projects that might not fit conventional investment criteria to find the necessary financial support.

Examples & Use Cases

  • 1A new board game designer raises $250,000 on Kickstarter by offering backers early copies of the game, exclusive editions, and personalized artwork as rewards.
  • 2A tech startup needing seed capital sells small equity stakes to hundreds of individual investors through an equity crowdfunding platform, complying with securities regulations.
  • 3A community project aiming to build a new public park solicits donations from thousands of local residents via an online platform to cover construction costs.

Related Terms

Seed FundingKickstarterIndiegogoEquity CrowdfundingAngel Investment

Part of the hmu.ai extensive business and technology library.