What is crowdfunding and how does it work?

In the past, when someone wanted to fund something — be it a project, a company, or anything that required capital to start — there were a few ways to raise money. They could take on debt from a loan. They could raise money from friends, family members, and angel or VC investors. They could even take the “bootstrapping” route and scrounge up as much money as possible to fund the project themselves.

In the late 2000s, a fourth option became viable for those trying to get something off the ground: crowdfunding.

Crowdfunding is a way to raise money from a large number of people. Large groups of people pool together small individual investments to provide the capital needed to get a company or project off the ground. Individuals, charities or companies can create a campaign for specific causes and anyone can contribute.Join thousands of investors Republic is a vibrant investor
community of 1,000,000 strong. Become an investor

Types of crowdfunding

  • Securities-based crowdfunding provides opportunities for people to invest in private companies (aka, startups). In this type of campaign, investors receive the promise of stock, future shares or another security issued by the company in exchange for capital. We’ll primarily discuss equity-based crowdfunding, but there are many different types of crowdfunding, including:
  • Donation-based crowdfunding is when someone donates to a specific cause or charity (think GoFundMe).
  • Reward-based crowdfunding is exactly what it sounds like. People donate to unlock a specific reward linked to the project they support.  For example, you might help fund a new product line and later receive that product in return.
  • Peer-to-peer lending allows individuals to obtain loans directly from other individuals without a bank or other financial institution acting as a middleman. Think of this as debt crowdfunding.
  • Real estate crowdfunding offers individuals opportunities to invest in real estate projects. This is especially useful for people who are interested in  real estate investing, but don’t want to deal with mortgage brokers, real estate agents, or contractors. This is a specialized type of securities crowdfunding.
  • Human capital crowdfunding is a way for people to raise money to back their personal growth or projects. Investors are given the opportunity to fund a project in exchange for a share of the winnings. For instance, many poker players crowdfund money to play, and then distribute a share of their winnings back to investors.

What is crowdfunding for companies?

Like other organizations, businesses can use crowdfunding to raise capital for their venture. When we define crowdfunding in business, we mostly think about startups, angel investments, and transactions outside of the traditional financial institutions. Put simply, crowdfunding for business presents a great opportunity for startups to source a large group of investors efficiently.

Crowdfunding opens early stage investment for innovative companies with diverse teams and a social mission, while also empowering the masses to not only actively fund the companies they believe in, but also benefit from that growth.

Brandi DeCarli, Farm from a box.Founding partner

How does crowdfunding work for companies?

How does crowdfunding work for companies

Platforms like Republic have made it easy for people (or backers, as they’re often called) to invest with just a few clicks. Typically, crowdfunding campaigns have a set goal and offer incentives to those who invest. If the goal is met, the backers usually benefit from supporting that campaign. If the company has an exit event in the future, like an acquisition or initial public offering, backers can earn cash or stock.

How is crowdfunding different?

In crowdfunding, numerous investors are invited to participate and contribute their share of the pie. This is a dramatic step away from more traditional fundraising, where companies and institutions seek capital from one or a few major investors. Crowdfunding is also primarily done online, whereas other forms of financing mostly occur offline.

The benefits of crowdfunding

The benefits of crowdfunding go way beyond raising money. 

Gaining access to capital is hard for most new ventures. Many early-stage companies are passed over by VCs for a variety of reasons, and getting money from banks or rich family members are hardly sound strategies. Crowdfunding levels the playing field by decreasing reliance on traditional and sometimes exclusive fundraising methods. Crowdfunding campaigns are also unique in their ability to draw interest from new users and drive engagement. Since one must engage the crowd to be successful, campaigns provide an incredible platform to raise awareness for a company, brand, product, or service. The campaign goal and timeline create a sense of urgency that motivates investors. Thus, crowdfunding presents startups with the opportunity to build buzz and secure early adopters. Startups can connect with potential customers who could also serve as investors and brand ambassadors. A successful campaign proves that there is interest in a product while simultaneously providing the runway necessary to support new project initiatives. 

The main benefit of crowdfunding is that you, as an entrepreneur (especially in tech), can now raise outside of the conventional means (VC and angel). Often, we chat about friends and family rounds and institutional investors being necessities for tech growth. For Black founders, our journeys are far from conventional because the systems in place have never thought of us as being conventional. Equity crowdfunding aligns with that.

Ofo Ezeugwu, WhoseYourLandlord.CEO & Co-Founder

From an investor’s perspective, crowdfunding provides an easy way to fund projects and people that you genuinely believe in and care about. In addition, crowdfunding allows investors to invest small amounts in multiple ventures, thereby diversifying their portfolios and maximizing the chances of a big payout. While crowdfunding is a high risk investment, where investors should only invest capital they are comfortable losing, hypothetically, all an investor really needs is one blockbuster investment to recoup other losses and realize a large return. Join thousands of investors Republic is a vibrant investor
community of 1,000,000 strong. Become an investor

The risks of crowdfunding

From a company’s perspective, crowdfunding can be a great way to raise funds quickly. While it requires a lot of work, promotion, and attention to have a successful crowdfunding campaign, over 90% of startups on Republic have raised successfully. Though success is never guaranteed, platforms like Republic use every available resource to bring more awareness to each campaign.

From an investor’s standpoint, just like other forms of investing, crowdfunding has its own risks. 

The risks of crowdfunding

For one, investors could lose their entire investment. Just because a company meets its crowdfunding campaign goal, doesn’t mean that company is bound to succeed. In fact, most startups fail, and if that business does not succeed, an investor will likely lose all the money invested. Even if a company does succeed, it may take years for any returns to materialize. 

There are  always  risks associated with crowdfunding campaigns. Investors need to be sure to vet any funding project to make sure their funds will be used appropriately and towards a credible company or cause. (Republic helps mitigate this risk by doing a thorough background check on all companies who raise on our platform.)

It is worth mentioning that, with the expansion of the private investing market, startup investing platforms like Republic have internal teams dedicated to lessening risks associated with the private market. Though these companies are nowhere near as tightly regulated and scrutinized as public companies, fraud prevention and other safeguards are put into place to ensure that accurate information is available. That way, investors can make informed decisions. 

Kitchen Scale

With regards to prepared merchandise and different plans, gauging fixings is a careful practice. What number of individuals can say they’ve kept up their New Year’s goals up until now? Possibly yours was to stay in shape and further develop the manner in which you eat? Keeping yourself persuaded to lead a better way of life can be interesting, we’ve all been there. In this article we’ll examine how your own personal kitchen scale can assist with keeping you solid, it has significantly more to bring to the table than you might suspect.

An incredible spot to begin when attempting to go down the sound course is your segment sizes. Without knowing it, a ton of us eat more than we truly need to. It is safe to say that you are eating to complete everything on your plate or would you say you are as yet ravenous? Kitchen scales these days are furnished with the capacity to screen little segment sizes with accuracy which can be of extraordinary use while likewise being aware of what you eat.

In the event that you like to be exact while alluding to the nourishment name on the food sacks, kitchen scales can be of incredible assistance! They additionally help with estimating the genuine serving sizes. For instance, if the bundling peruses that there are 100 calories in 10 grams, which is 10 pieces, in any case, on setting those 10 pieces on the kitchen scale may not really gauge 100 grams!

Gauging your food can energize better dietary patterns. Whenever you’ve become accustomed to utilizing kitchen scales, you will have a reasonable gauge of what a sound bit size and admission might resemble. This empowers you to be careful while eating at a café and requesting food off the menu.

Microwave

Are microwaves terrible for your wellbeing? Pretty much every American home has a microwave. The accommodation they offer is evident. In any case, notwithstanding the far reaching utilization of microwaves and their superb security record, a few group have waiting questions that preparing food with microwaves some way or another makes food less solid by destroying the supplements out of food. Does cooking with microwaves do that? Is microwave food solid?

Seeing how microwaves work can assist with explaining the response to these normal inquiries. Microwaves cook food utilizing rushes of energy that are like radio waves yet more limited. These waves are surprisingly specific, principally influencing water and different atoms that are electrically unbalanced — one end emphatically charged and the other contrarily charged. Microwaves cause these atoms to vibrate and rapidly develop warm (heat) energy.

To the extent vegetables go, cooking them in water denies them of a portion of their healthy benefit in light of the fact that the supplements filter out into the cooking water. For instance, bubbled broccoli loses glucosinolate, the sulfur-containing compound that might give the vegetable its malignancy battling properties (just as the taste that many discover unmistakable and some find nauseating). Is steaming vegetables — even microwave steaming — better? In certain regards, yes. For instance, steamed broccoli clutches more glucosinolate than bubbled or singed broccoli.

The cooking technique that best holds supplements is one that cooks rapidly, warms nourishment for the most brief measure of time, and uses as minimal fluid as could really be expected. Microwaving meets those standards. Utilizing the microwave with a limited quantity of water basically steams food from the back to front. That keeps in a bigger number of nutrients and minerals than practically some other cooking strategy and shows microwave food can in fact be sound.

In any case, we should not get too lost in the subtleties. Vegetables, essentially any way you set them up, are useful for you, and the majority of us don’t eat enough of them. What’s more, is the microwave fortunate or unfortunate? The microwave is a wonder of designing, a marvel of accommodation — and now and then healthfully favorable for sure.