Finance Crowd-Funding (Essay Sample)

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Crowd-Funding
Crowd- funding has gained popularity in the recent years, it is a way of raising money outside the traditional ways that involved financial institutions. Crowd-funding is a way of raising money from a large pool of people which is basically done through the internet (Dresner, 35). Crowd-funding be applied in raising capital for companies that are profit oriented, for- profit companies and non-profit ventures, the latter being for mostly for humanitarian causes. The for-profit crowd-funding can be characterized in to two, Reward crowd-funding which is done by way of pre-selling the products or the services before the official launch so as to gather the momentum for when the official launch is done (Steinberg, 18). The other form is the equity crowd-funding, this is the most popular and it entails offering shares or equity of a business in its initial stages in exchange for capital. The backer capitalizes on the potential of the business growing to a profitable venture with time and therefore earning dividends as a stakeholder in the business.
The crowd-funding industry has grown over time and it boost of raising funds to the tune of $5 billion by June 2015 (Dresner, 41). The industry continues to attract more players and it is expected that the figure will have doubled in the next two years as people are becoming more actively involved (Steinberg, 27). There has been the development of crowd-funding companies that help and organization or an entity to conduct the crowd-funding at a fee, this include Kickstarter and indiegogo (Steinberg, 33). There are other players that are mainly composed start-up companies that hope to raise capital. Humanitarian groups and organizations have also been vibrant in crowd-funding as they hope raise funds for relief. Most of the relative characteristic of crowd-funding players is the fact that they invest on a huge social media following, another characteristic how they keep in touch with the community, this enables instill faith among the people.
One of the successful for-profit crowd funded ventures Is Lumio, this is a venture that deals with an invention of a modern lamp can be folded to multiple forms to meet one’s needs, this lamp can be folded to a bag, to a book and may other daily utility forms. The company has now began full production of the modern lamps after receiving $578,000 from 5276 backers (Lumio). The crowd-funding for Lumio was done on Kickstarter. Another successful venture is radiate athletic, this is an invention that makes work out attire that changes color based on the amount of heat one generates during work out sessions ...