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Crowdfunding is a method of raising funds by collecting small contributions from a large group of people, typically through online platforms, to support a specific project, cause, or venture.
Crowdfunding works by individuals or organizations presenting their projects online, offering incentives or rewards, and inviting people to contribute. Supporters pledge money, and the project owner receives the funds if goals are met.
The main types of crowdfunding are donation-based, reward-based, equity-based, and debt-based, each offering different ways of giving, receiving rewards, or gaining ownership and profit-sharing opportunities.
Crowdfunding helps raise capital without traditional funding sources. It also validates ideas, builds community support, offers marketing opportunities, and provides exposure to a wider audience, increasing project visibility.
Risks include not reaching funding goals, lack of transparency, scams, and failed campaigns. Additionally, backers may not receive rewards, and there may be legal or financial implications for campaign organizers.
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