Crowdfunding is an Anglo-Saxon term that literally means: "gathering from the crowd." This expression represents a type of fundraising undertaken by a group of people who gather their resources to realize a project. With the arrival of the Internet, this process has been eased by digital platforms.
Conferring money into a particular project, which is selected using an online platform, means becoming a donor, a funder or an investor, depending on the nature of the project in which you choose to put your money. Five main categories of crowdfunding are identified.
Donation crowdfunding: allows one to financially support a particular social, environmental, etc. cause as an act of liberality. Nothing is expected to be received in return.
Reward crowdfunding: allows one to financially support an innovative project or idea. In return, you expect to receive the product or service you have chosen to support before it goes on the market.
Equity crowdfunding: allows people to subscribe to the shares of a company, thus investing their own money in it. In return, the investor expects to obtain an increase in the value of their shares and/or the distribution of a significant profit by the company.
Debt crowdfunding: allows the investor to subscribe to a debt security or bond issued by a company implementing a specific project. In return, at the scheduled maturity of the debt security and/or bond, the investor will receive the invested capital plus a predetermined interest rate.
Lending crowdfunding: allows subjects to lend their money to a company, which will use it for its development plans by paying a predetermined return on their loan.
Equity crowdfunding, Debt crowdfunding, and Lending crowdfunding are also referred to as "Crowdinvesting," products as, in return of an investment or loan subscription, the investor expects to generate a return or interest rate on the capital invested.