What is crowdfunding: Get started with Reward-based crowdfunding


作者:Tom Phan

Crowdfunding, a practice that has been popular in the past 10 years, and in the next 10 years, it will become a mainstream way to promote new products.

Crowdfunding refers to the practice of funding a project, venture, or cause by raising small amounts of money from a large number of people, typically via the internet. 

In a crowdfunding campaign, the person or organization seeking a target amount to be raised, as donations or investments from people who are interested in supporting the project.

There are different types of crowdfunding models,

including Donation-based crowdfunding, Equity crowdfunding, Debt crowdfunding, and Reward-based crowdfunding. 

In this article, we will be discussing on the upcoming model in Malaysia, the Reward-based crowdfunding.

Reward-based crowdfunding

Reward-based crowdfunding, a type of crowdfunding model where backers support a project or venture, in exchange for a non-financial reward, typically a product or service offered by the project creator.

First, a project creator will set up a crowdfunding campaign on a platform (such as Kickstarter or Indiegogo in international case, or MYFEEL for Malaysia), and set a funding goal with deadline. 

They then offer various rewards to backers, based on the amount of money they contribute. These rewards can range from early access to the product or service, exclusive merchandise, or other perks.

For example, a company may launch a crowdfunding campaign to create a new smartwatch. They may offer backers the watch itself at a discounted price, a limited edition version of the watch, or even the opportunity to have their name engraved on the watch.

One of the benefits of Reward-based crowdfunding is that, it helps project creators to validate their idea and generate early sales. 

By offering early access to their product or service, creators can get feedback from backers, and refine their offering before launching to the broader market.

Conclusion: It's about connection

Crowdfunding has increasingly become popular in recent years, as it allows entrepreneurs, artists, and other individuals, to raise funds without the need for traditional sources of funding, such as banks or venture capitalists. 

Besides, it also provides a way for individuals to support projects that they believe in, and connect with like-minded people who share their interests, a very good way to promote as well.

However, it's important to note that reward-based crowdfunding campaigns are not without risk. 

There is always the possibility that the project will not be completed, or that the rewards will not be fulfilled as promised. Backers should carefully research the project and the creator before making a contribution. Fortunately until this date, it is still very safe to create a campaign in Malaysia.

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