Crowdfunding

The collection of monetary value from investors to fund any project, in the cryptocurrency world to protocol, dApp or a DeFi tool, is called crowdfunding.

What is Crowdfunding?

Crowdfunding is not about getting financing from investors with a wealth of assets. Crowdfunding is something very different. So much so that a large group of disconnected and not very wealthy people supports a project in the form of a “donation” through a platform on the Internet. The amount paid by donors can vary between $1 and $10, or it can be more.

Note that in crowdfunding, people who fund the project do not have any share in the project. They just support something they like and want it to be. These people may not even have anything in common.

Although people have different goals in the crowdfunding system, the system works with the same simple principle. The entrepreneur promotes his project on one or more of the sites prepared to fund different projects. Anyone who visits these sites likes the project and wants it to come to life, contributes to the project through this site within their own means.

The important thing is that your participants are convinced of your project. Projects that require funding, usually by making a prototype of the product, together with its photos and even a video, are more successful.

Two Types of Crowdfunding: Non-Investment and Investment Model

In addition to crowdfunding, which does not have any investment value, crowdfunding events where money donors make an investment for themselves also take place in the financial world.

• If you are crowdfunding a non-investment model for your project, you can organize it as reward-based or donation-based. Rewards will usually be things that have no financial value.
• But if you are organizing a crowdfunding in the investment model, you should organize it as debt-based or equity-based.

A Succesful Crowdfunding Example: Mzondi

In Mzondi, where people have lived for years with one toilet for every hundred people, in March 2018 it raised R67,000 in a crowdfunding campaign to build a toilet. Then, the construction of nine flush toilets began.

The project was originally supposed to build 30 pit toilets, but after consultation with the Mzondi community, the public said they preferred flush toilets.

“We are so grateful because we can finally live like human beings,” said Busisiwe Radebe, a public resident.