What is crowdfunding and how can it help you?

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The collaborative economy has brought us many benefits, one of them is crowdfunding which, to explain it in a simple way, is to obtain money from many people to fund a project, a project or obtain a loan.

Previously, in order to obtain financing it was necessary to go with an institution and have it offer you the loan under its terms. Now, technology allows you to request this financing from many people with fairer terms for both interested parties. Thus, mutual benefits can be obtained.

Crowdfunding as part of the collaborative economy is based on the trust of people with their counterparts. Offer a transport service to another person, your house to host someone or lend your money only because you trust the system and the community of which you are a part.

The benefits are for everyone, by not borrowing from an institution, the interests are usually much lower. The reason is simple, the institutions have very large operating costs, while the people who lend only want to have better returns for their money.

Types of Crowdfunding

Types of Crowdfunding

Donation and rewards: In this type of funding, people donate their money for supporting a cause or project. Some give rewards like t-shirts or special recognitions.

Debt: The people who lend their money are waiting for it back and with interest, they are investments in personal loans. The clearest example is Duplexo.

Actions: In this type of crowdfunding, investors put their money in exchange for the actions of the project or company that they fund.

Crowdfunding is a virtuous circle that appreciates its success to technology, since all those involved obtain benefits. Undoubtedly one of the most important factors for this to happen, as we already mentioned, is the trust that each one of the people that is part must generate.

On the part of Duplexo, trust is generated by choosing only responsible credit applicants, who pass the strict selection criteria. This is how the security of investors’ money can be guaranteed to some extent.

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