What is Crowdfunding? A Comprehensive Guide

Basic Principles of Crowdfunding

1. Project Launch: Creators publish their project on a crowdfunding platform, setting a funding goal and a deadline.
2. Promotion: Creators use social media, email marketing, etc., to attract potential supporters.
3. Fundraising: Supporters choose different reward options to contribute to the project.
4. Project Execution: Once the funding target is met, creators proceed with the project and fulfill their promises to the supporters.
5. Funds Management and Settlement: After the project’s success, funds are settled and transferred to the creator’s account via payment service providers.

History and Evolution of Crowdfunding

• In 2008, Indiegogo was founded, becoming one of the earliest crowdfunding platforms.
• In 2009, Kickstarter was established, focusing on creative and technology projects.
• In 2012, the U.S. passed the JOBS Act, which promoted the development of equity crowdfunding.
• In recent years, crowdfunding has been widely applied in real estate, technology, healthcare, and other fields.

Main Types of Crowdfunding

• Reward-Based Crowdfunding: Supporters fund projects in exchange for products or services, as seen on Kickstarter and Indiegogo.
• Equity Crowdfunding: Supporters invest funds in exchange for company shares.
• Donation-Based Crowdfunding: Used for charitable or public welfare projects, where supporters do not expect a return.
• Debt Crowdfunding: Also known as P2P lending, where supporters receive returns through loans.

Advantages and Risks of Crowdfunding

Advantages

• Wide funding sources, suitable for startups and individual projects.
• Can validate market demand and reduce startup risks.
• Provides brand exposure and increases project visibility.

Risks

• If the funding goal is not met, the project may fail.
• Poor project execution can negatively impact brand reputation.
• Legal and tax issues need to be planned in advance.

Main Crowdfunding Platforms

Kickstarter

• Suitable for creative, technology, and artistic projects.
• Uses an “All-or-Nothing” funding model.
• Platform fees are around 5%.

Indiegogo

• Suitable for technology, innovation, and social good projects.
• Offers a “Flexible Funding” model, where funds are received even if the target isn’t met.
• Supports international projects.

Legal and Compliance Requirements of Crowdfunding

• United States: Equity crowdfunding is regulated under the JOBS Act, and platforms need to be SEC-approved.
• European Union: Different countries have varying regulations, with some countries having strict financial supervision over crowdfunding.

How PhotonPay Helps with Fund Collection on Kickstarter and Indiegogo?

Advantages of PhotonPay

1. Global Fund Collection:
   1. Supports payment collection on Kickstarter and Indiegogo.
   2. Direct payment in multiple currencies, including USD, EUR, GBP and other major currencies.
2. Efficient Settlement and Fast Withdrawals:
   1. Flexible withdrawal options to ensure quick access to funds.
   2. Low transaction fees to optimize cost structure.
3. Security and Compliance:
   1. Adheres to international payment compliance standards, ensuring the safety of funds.
   2. Utilizes advanced risk control systems to prevent fraud and transaction risks.
4. One-Stop Service, Enhancing Operational Efficiency:
   1. Provides complete financial management tools to easily track fund flows.
   2. Professional customer support to resolve payment-related issues.

How to Use PhotonPay for Crowdfunding Fund Collection?

1. Register for a PhotonPay Account:
   1. Visit PhotonPay’s website and complete the business verification process.
2. Link Your Crowdfunding Platform Account:
   1. Set PhotonPay as your payment method in the backend of Kickstarter or Indiegogo.
3. Launch Your Crowdfunding Project:
   1. Clearly specify your payment methods on the crowdfunding page to ensure smooth payments from supporters.
4. Fund Settlement and Withdrawal:
   1. Once the crowdfunding is successful, funds are transferred to your PhotonPay account and can be withdrawn to your bank account at any time.

Conclusion