Types of crowdfunding

Types of crowdfunding

12 November 2016




crowdfunding-folla Crowdfunding

It's hard to find someone by now who has never even heard of crowdfunding.

The translation from English is quite immediate: if crowd is the crowd, and funding is the funding, this tool will not have much different from the classic "fundraising" to which we are exposed in the most diverse forms. Surely this idea has a basis of truth, and there are several examples that we find even in crowdfunding that place the origins as far back as 1700.

Between etymology and technology

For many, in fact, this concept has its origins in Jonathan Swift's Irish Loan Fund, one of the very first forms of microcredit. It was in fact a series of small independent but regulated companies that made loans to private individuals (mainly to farming families with no certain guarantees). But to get to the crowdfunding we are talking about today, we have to go back to 2006. Michael Sullivan had created fundavlog, a potential incubator for projects and events related to video blogging, which also included the possibility of making an online donation: on August 12 of that year he wrote:

"But I also decided that another similar term can be used to explain the general ideas being presented here. And I think that term is 'Crowdfunding'. Money is the root. Money incubates, inspires and gives rise to good content. Money provides new and/or rejuvenated opportunities."
"But I've also decided that another [than the term crowdsourcing, ed] similar word can be used to explain the general ideas that are presented here. And I think that term is crowdfunding. Money is the root. Money grows, inspires and gives rise to good content. Money provides new or renewed opportunities."

The term then went global with the launch of the Kickstarter platform 3 years later in April 2009. The US company operates with a specific type of crowdfunding, reward-based. From here we take a cue to explain the different types of this type of funding.

Types of crowdfunding

In all types of crowdfunding there is a project and multiple supporters (a crowd, in fact) who offer money to make it happen. The substantial difference lies in what is offered in exchange for the figures offered by the project's producers.

  • Reward-based: this is the model used, as we said, by Kickstarter. The producers of the project offer a "reward" to those who finance them. Since this type of crowdfunding is often used to finance films, books and music albums, the reward is often "emotional" (like being mentioned in the credits, for example). To be financed, however, can also be companies that produce physical products. Often those who invest in these projects receive the product first in return once it is ready for the market.

  • Donation-based: this is the model of nonprofit and non-profit organizations looking for donors to support their charitable enterprises. It is actually the most traditional form of crowdfunding: the donor does not receive financial rewards or any other form.

  • Lending - based: In this case the money is actually lent to the applicants, who can use the crowdfunding platform to carry out their project - professional or personal, and return the money once the project is completed. Usually the interest rate of the loan is higher than that proposed by banks.

  • Equity - based: This is the model currently most used by startups in Italy. Those who invest do not receive a simple "reward", but become partners in the company. By supporting an equity crowdfunding project, therefore, you buy shares in the company that is seeking funds.

Equity crowdfunding in Italy

Italy was the first country in Europe to regulate equity crowdfunding for innovative startups. With the "Decreto Crescita") Consob (National Commission for Companies and the Stock Exchange) has issued its own Regulation on the collection of risk capital by innovative startups through online portals, which therefore regulates this type of crowdfunding.

Mamacrowd operates through equity crowdfunding and was born from SiamoSociMamacrowd is the Italian portal that has been facilitating the meeting between investors and unlisted assets since 2011. Founded by nine professionals in innovation and asset management and owned by Azimut, the largest independent financial reality in the Italian market, SiamoSoci is a leader in the Italian market in offering alternative investment solutions. In recent years, SiamoSoci has raised more than 16 million euros in support of 160 innovative projects.

Thanks to Consob's authorization of the Mamacrowd portal, innovative startups can register and launch a fundraising campaign in search of new members: there are no sector constraints, so much so that startups with a currently active campaign operate in very different markets.

Parterre: a company that provides entertainment and data collection solutions dedicated to media and brands, operating in the mobile TV sector.

Parterre's campaign
on MamaCrowd

Gromia: proposes a simple way to rent houses and rooms in the medium and long term: online, without ties and with savings of over 70%.

Gromia's campaign
on MamaCrowd

PerFrutto: predicts the growth of fruits, improves the resources used in agriculture and optimizes the yield of productions up to 40%.

PerFrutto's campaign
on MamaCrowd

Felfil: makes 3D printing more environmentally friendly and economical, thanks to the 3d printer extruder that allows to create completely recycled coils.

Felfil's campaign
on MamaCrowd

By registering on Mamacrowd it is possible to invest various amounts of money on different projects, choosing the most interesting one for your experience at this link. Once you have chosen the startup you want to become a partner of, all you have to do is make a simple transfer to invest, directly from home.

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