A project may be one of the following funding types:
A bond is a debt investment in which an investor loans money to an entity for a defined period of time.
Community shares are investments in community-owned enterprises that are co-operative in nature and aim to benefit the community in which they operate. They are run democratically with investors becoming members of the organisation. The risk associated with community shares varies, depending on the individual organisation. In the UK, they are commonly shares in Industrial & Provident Societies.
Similar to a bond but debentures are not backed by collateral.
A donation is the giving of money, without any expectation of a financial return. This form of finance is commonly used for charitable and philanthropic purposes. Donations can be very large or small and may be eligible for tax relief depending on the law of your country.
An equity investment means buying shares or stock in a company and is generally regulated by a national regulatory organisation. Equity investment (known as venture capital and angel investing when referring to young companies) is a useful source of finance, as it enables growth without having to pay back the money straight away. An investor may get voting rights on company matters.E quity investments carry a high risk as the value of shares can go down as well as up, hence there is no guarantee an investor will get their money back. A return on invested money may come when the company is bought, when an investor sells their shares at a higher price than they bought them, or when dividends are paid out from the company's profits. With startup (new) companies particularly, an investor should expect to wait several years to make a profit in any of these ways. The majority of startups go out of business, but there is also the potential for very high returns too.
A mechanism that allows users to pool funds together to form a fund for insurance claims.
Invoice trading is the process in which SMEs (sellers) auction their invoices online, as a way to gain quick access to money that would otherwise be tied up.
A loan is money given to someone for a set period of time with the expectation that it will be repaid. The loan may or may not carry interest, making it potentially profitable for the lender. "Peer-to-peer" (P2P) loans is the term for a loan made directly to someone by another person via a website. It is sometimes regulated by a national regulatory organisation.
A project may invite a recurring subscription from supporters to achieve their aim. Subscription members then receive ongoing access to the product or service they have supported.
A microdonation is the donation of a very small amount of money. This form of finance is commonly used for charitable purposes.
Microfinance refers to a range of financial options involving small amounts of money being offered. Microfinance services are often offered to entrepreneurs in developing countries to enable them to establish a business and therefore become self-sufficient. Microloans may or may not be repaid, and may or may not carry interest. Microfinance organisations may offer microloans, or accept microdonations.
A microloan is the loan of a very small amount of money. Microloans are often made to entrepreneurs in developing countries to enable them to establish a business and therefore become self-sufficient. Microloans may or may not be repaid, and may or may not carry interest.
This category includes any other service or site we thought might be of interest to you, but doesn't fit into any of the above larger categories. For example bill-sharing services, or technologies to create your own platform, or where the service has not yet been fully defined.
Revenue-sharing arrangements mean an investor agrees to receiving a share of the organisation's revenue in exchange for their investment. The returns to the investor will therefore depend on how successful the organisation is at selling its products or services.
Rewards refers to a pledge of money in support of a project or business in return for a gift. For example, this gift could be a thank you email, a version of the product, or an invitation to an event. Where products are given routinely as a reward for giving money, this is sometimes called 'pre-purchase' or 'pretail', as it is similar to ordering an existing product before it has been made.
Royalties are recurring payments made in return for the use of something (such as a book or soundtrack). How much money an investor makes from an investment in royalties will depend on how much the asset is used. If it is not used very much, they may receive less than they invested. If it is used a lot, they could receive more than they invested.