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Crowdfunding is the process of raising finance by having numerous of investors investing an amount of money into a given company, which is seeking funds. Companies can raise capital either through equity or debt funding, and in return the investors are given shares or bonds in the company.
The crowdfunding industry itself is not a new concept. As far back as 1606 the Dutch East India Company used the power of the crowd in order to fund the lucrative venture of conducting trade between Europe and Asia. But driven by a lack of finance for small enterprises, caused by the 2008/09 financial crisis, along with significant advancements in the growth of the Internet, the crowdfunding industry has boomed in the past few years.
How it works at Crowd for Angels
Companies create a pitch on the Crowd for Angels platform, setting out the reasons they are seeking the investment. As a part of this process, companies must decide on a 'minimum funding target' and a 'maximum funding target' they are looking to raise. Furthermore, companies must specify the price of the shares they are offering or the interest rate they are willing to offer investors on a bond, depending on which type of funding is taking place.
Companies are given 90 days to complete the raising of funds. If they are not successful, any committed funds collected will be returned to the investors' accounts on the Crowd for Angels platform. If a company is successful, it will use the funds raised from the crowd to accomplish goals outlined in the pitch, along with other relevant information about the company.