An introduction to online based crowd funding

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Crowd funding is a type of financing, through which products, projects or business ideas can be
supplied with capital. Thus acting as an investment channel comprising masses of anonymous
internet users (e.g, Prosper.com).

An action is characterized by a minimum amount of capital that must be leveraged by the mass,
before it commences. For this performance, the crowd funders receive remuneration, which can
take various forms (eg, money, in kind), but always has a monetarised value. In addition, the
return value bears an idealistic or altruistic value.

The communication between lenders and borrowers is realized on a Web 2.0 platform.
Typically, the financing events published on such platforms largely entail open tender, which is
aimed at all business-enabled internet users. There is no roll-on or exclusion of users
(anonymous composition).

Funding may be total or partial, or take the form of a capital increase (in the latter case,
sometimes called financing 2.0 or fundraiser 2.0).

The call can be widely opened, or reduced to a circle of contact networks and friends. The
degree of involvement of users can be very variable, ranging from simple financial support for
effective collaboration and co-production with the creator.

The individual roles of different people (groups) in the crowd funding vividly illustrate an
exceptional collaboration that goes beyond national boundaries. It is an extensible model that
can be supplemented by project-specific roles (eg significant suppliers or distributors).

Basically, the developed model, however, is based on three different roles that exist in each
scenario and the crowd funding from individuals, groups or organizations. Each role is
characterized by specific properties.

In addition to the different roles included the role model of a platform which acts as a
communication tool for exchanging information between the parties. The owner of the platform
can be one of the parties.

The sites offering such financing platforms in general are remunerated by charging a
commission on successful transactions. In the vast majority of cases, registration is free to
applicants for projects.

The economic balance is sometimes supplemented by contextual advertising, billing services for
optional annexes (advice, editing, communication, etc). In addition to partnerships with
production companies or banks.

While some sites prefer to let users to enter into partnerships with other companies, providing
extra funding and becoming co-producers. The intermediation platform can be only a place to
build equity finance.

But often, these sites combine crowdfunding and crowdsourcing, allowing the user to participate
in the creative process by contacting the creator. The internet sponsors or visitors can
collaboratively contribute content to the project.