The Basics of Crowdfunding

Though the term crowdsourcing has only become commonplace in recent years, the concept has been around much longer. Sharing information, ideas, labor, and even financial backing is not a new thing, yet with the popularity of crowdfunding Web sites such as Indiegogo, Kickstarter, and others, getting the public to support the project of an individual or a business has become easier than ever.

Those in artistic communities may talk about crowdfunding for a band's new album or an independent film. But even if you aren't in a creative industry, crowdfunding is a great way to obtain backing from a surprising number of people. The benefits for any business—creative or not—are numerous.

Crowdfunding versus crowdsourcing

What is crowdfunding and how is it different from crowdsourcing?

Crowdfunding and crowdsourcing are closely related, but they are not the same thing. Crowdsourcing is the act of obtaining anything from a group of people—whether it's labor, ideas, content, or anything else supplied to a business or institution.

Crowdfunding is a type of crowdsourcing. Businesses or institutions receive financial donations or contributions from outside parties willing to make a donation or investment. Often when people think about the word crowdfunding, they automatically think about start-ups and creative projects. But crowdfunding is catching on for all kinds of businesses. Yours can be one of them.

Are all crowdfunding sites the same?

There are several crowdfunding sites on the Internet, but each offers something distinctly different. It's important to know which ones are best suited to your business before you sign up and look for an audience.

Following are some of the most popular sites and a brief explanation of what they focus on. You've probably heard of at least a few.

Kickstarter. One of the earliest and most popular crowdfunding sites, Kickstarter is for artistic project funding, such as gallery installations, books, or albums.

Indiegogo. Another early bird in the crowdfunding network, Indiegogo is a way to fund an artistic project, personal endeavor, or charity.

Crowdfunder. Crowdfunder is specifically for businesses that need capital, whether through donations or even investors.

Somolend. Somolend can help a business get back on its feet through debt-related loans from banks and other investors.

Appbackr. For those looking to fund a new mobile application, this donation-based crowdfunding site is a great place to start.

Crowdrise. Crowdrise helps you find donations for causes and charities. If your business is sponsoring a charitable event, 

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