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Crowdfunding, Digital Interactions, Platforms, Online Communities, Digital Economy
Digitalizing the funding industry Over the past few years, digital platforms have emerged as a new way to disrupt industries. These platforms not only connect riders and drivers, like Liber, or hosts and guests, like Alrbnb, but also ventures and funders. Crowdfunding platforms like LendIngclub or Kickstarter have gained widespread visibility and acceptance In recent years. Crowdfunding was virtually nonexistent until 2010 but has been growing exponentially since 2010. In 2015, the volume rose to US$34.4 billion, slightly surpassing the venture capitalist industry and is expected to continue growing quickly.
Crowdfunding - using the digital space to raise money III Crowdfunding is a method of raising funds to support a venture, typically by raising small amounts from a large number of investors. This whole process is conducted on an online platform that facilitates interactions between project creators and potential contributors, called backers.
Typically, a project creator posts a project on a platform seeking a certain amount of funds for some venture. Potential backers view the project and contribute money if they are convinced of the idea. In most cases, these backers receive something in return. With many backers contributing different amounts, the projects may meet their funding goals and the project creators can move on with their ventures. Although the crowdfunding model is similar across all platforms, the platforms cater to groups with entirely different motivations. Basically, there are four different crowdfunding models:
> Donation-based crowdfunding refers to charitable causes. Typically, there is no reward and contributors are genuinely trying to help. An example of this form of project is the Pulse Victim Fund posted on GoFundMe after the 2016 Orlando Shooting.
> Reward-based crowdfunding is the most common form of crowdfunding. Typical projects are frequently covered in different media, and sites such as Kickstarter and Indiegogo corner a large proportion of the reward-based crowdfunding market. Their contributors receive a compensation or perk - which can be symbolic, such as mere appreciation; or tangible, such as the funded product. An example of this form is the Pebble Watch (see below), which has raised millions on Kickstarter.
> Equity-based crowdfunding shares the profits of a venture by offering contributors ownership in the business in exchange for...