Overview: Crowd funding is the mechanism by which startups can gain financing by asking multiple individuals to each give a small investment. The company can set an investment target and once this has been reached they are free to use the capital.
Most notably there are 4 main types of Crowd Funding:
1. Equity Based: Investors receive a stake in the company. Money given is seen as an investment in shares of the venture
2. Donation Based: Contributions go towards a charitable cause
3. Lending Based: Investors are repaid for their investment over a period of time, at an agreed interest rate
4. Reward Based: Investors receive a tangible item or service in return for their funds.