Finance
How does crowdfunding work?
Crowdfunding works by raising small amounts of money from many people, usually online, to fund a project or business. Instead of one big investor, a 'crowd' each chips in — sometimes for a reward, a product, or a share of the company.
See it in motion.
Watch a 2-minute animated lesson that shows exactly how crowdfunding works.
Step by step
- 1Many people each contribute a small amount.
- 2Funds are usually raised through online platforms.
- 3Backers may get rewards, products, or equity.
- 4It lets creators raise money without a single big investor.
Frequently asked questions
- How does crowdfunding work?
- A project raises money online from many people who each contribute a small amount toward the goal.
- What are the types of crowdfunding?
- Reward-based, donation-based, equity (a share of the company), and lending-based crowdfunding.
- What happens if a crowdfunding goal isn't met?
- On many platforms, pledges are refunded if the campaign doesn't reach its target.