## Contemporary Sources of Funding
Modern technology has enabled new funding mechanisms beyond traditional banking and capital markets.
### 1. Crowdfunding (General)
- Raising small amounts from a large number of people, typically via the internet
- Used for: projects, start-ups, causes
- Platforms may charge processing/transaction fees
Three parties involved:
1. Fund Raiser (project/startup/cause)
2. Mediator Platform (website/app)
3. Investors/Donors
### 2. Equity Crowdfunding
- Investors receive shares in exchange for money
- Each investor gets a stake proportional to amount invested
- Popular among start-ups
- Platforms: SeedInvest, Start Engine, Equity Net
### 3. Peer-to-Peer (P2P) Lending
- Unsecured loans given by individual lenders to borrowers via online platforms
- Borrowers repay with interest
- Investors assess risk and expected return before lending
- Popular Indian Platforms: Faircent, Lendbox, i2iFunding, RupeeCircle
### 4. Start-up Funding via Crowdfunding
How crowdfunding helps new companies:
- Validate business idea (market test)
- Raise equity or debt capital
- Avoid complex bank procedures and collateral requirements
### 5. Donation-Based Crowdfunding
- People donate without expecting any return
- Used for: medical, educational, charitable causes
- Platforms: GoFundMe (medical/education), Ketto (India – medical), FuelADream (social impact)
### Comparison of Crowdfunding Types
| Type | Return to Contributor | Example Use |
|---|---|---|
| Equity Crowdfunding | Equity shares (ownership) | Startup raises seed capital |
| P2P Lending | Interest income | Personal loan, SME loan |
| Donation-Based | Nothing (altruistic) | Medical emergency fund |
| Reward-Based | Product/perk (not financial) | Pre-launch product campaign |