Business (Y12) - Sources of finance - Crowdfunding

What is crowdfunding?

People investing in a business via online platforms

Is crowdfunding a short-term or long-term source of finance?

Short-term

Is crowdfunding an internal or external source of finance?

External source

What are the key features of crowdfunding?

Could involve investors getting rewards such as early access to products or discounts

What are the benefits of crowdfunding?

Speedy and easy to set up campaign, business in full control, potential for large financing, raising finance whilst generating publicity, doesn’t have to include giving away shares

What are the drawbacks of crowdfunding?

Highly competitive, fees paid to crowdfunding sites, no guarantee target will be reached, leak valuable information about business ideas