Rewards-based crowdfunding consists of individuals donating to a project or business with the expectation of receiving a non-financial reward in return, such as goods or services at a later stage. A common example is a project or business offering a unique service (rewards) or a new product (pre-selling) in return for investment. This form of crowdfunding allows companies to launch with orders already on the books and cash-flow secured (a major issue for new businesses) and gathers an audience before a product launch.
- Funds given don't have to be repaid; you just deliver the service or the goods promised.
- Orders are secured before the launch of a new product, and the crowdfunding campaign allows you to build your customer base as you raise funds.
- You are obliged to deliver on your promises on schedule.
- It is a popular option for startups and entrepreneurs as it provides a way to fund the launch of new companies or products.
- It is particularly suitable for products and services that either are innovative or garner high levels of consumer attention.
- Complicated concepts or products are less suitable for rewards crowdfunding.
Is it for me?
|Equity crowdfunding||Rewards-based crowdfunding||Peer-to-peer lending|
|Profitable growing business||✓||✘||✓|
|Established and steadily growing||✓||✘||✓|
|Established stable business||✓||✘||✓|
|Launching new product/service/brand||✓||✓||✓|
|Expanding into new territories||✓||✓||✓|
|Investing in new facilities||✘||✘||✓|
|Looking to refinance||✓||✘||✓|
|In need of capital restructuring||✓||✘||✓|
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