When individuals are able to invest in a business in return for a share of their business. This would usually be used by businesses that are starting up.
Advantages of crowdfunding?
Creates an organic customer base - Customers come naturally
The platform provides a form of free marketing
A good credit rating is not required so new businesses that lack a trading record can attract funding
drawbacks of crowdfunding
Businesses need to provide a persuasive plan to convince the individuals to invest as they will be competing against others
Potential for negative publicity - if the business is not successful in attracting enough crowdfunding capital
