Crowdfunding is an alternative method of raising money to finance different kind of purposes. The concept of crowdfunding is to gather a large group of people(the crowd) who fund small amounts of money to eventually reach the total amount desirable for financing the purpose.
Crowdfunding is used by all kind of people and groups like entrepreneurs, charities, ...view middle of the document...
The purpose can be everything, just as long people are willing to invest into the idea.
The difference between crowdfunding and traditional fund raising is that crowdfunding needs to attract a large group of people who all donate or invest a (small) amount of money to eventually reach the total amount needed. A traditional finance is mostly done by attracting one or two organizations or businesses who invest the total amount of money needed, it can also be a loan from a bank or other financing institution. I think you can see crowdfunding as getting money from a bank where the bank as intermediate is ruled out. Normally a bank collects money from a lot of different people(their customers savings) and then they loan the money to others who need it. The bank in this role takes all the risk and chooses what to finance and what not. When the bank is ruled out you get crowdfunding