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Crowdfunding? What Is It?

posted Apr 3, 2013, 4:29 PM by Andrew Manzo

    Crowdfunding, or crowd financing, is a practice whereby a person or a company (fund seeker) raises small amounts of money from a large number of contributors (funders), typically via social media.

    The money can be raised to support a wide variety of activities, for example, to stage a cultural event, to produce a film or an album, to help disaster victims, to back the development of a technology product or to jump-start a business. There is no financial institution or intermediary between the fund seeker and the funders: the solicitation is direct.

    Although not new, this funding model is gaining momentum thanks to the popularity of the Internet and social media, which enable fund seekers to reach a large number of people worldwide. Multiple crowdfunding sites have been created to help bring these parties together.

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