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WHAT IS CROWDFUNDING?

Donation-Based Crowdfunding

For individuals

In donation-based crowdfunding, individuals seek small donations from a large group of people. This method is ideal for raising funds for charitable causes or personal needs, such as medical expenses or other unexpected financial hardships.

Example: Someone might start a SAVESA24 donation-based campaign to cover the medical bills of a family member undergoing expensive treatment. Contributors donate out of goodwill without expecting anything in return. Our Assisting the Elderly is a good example of a Donation-Based Campaign.

START A DONATION-BASED CAMPAIGN

Pros:

Accessibility: Easy for anyone to contribute, regardless of financial means.
Altruism: Attracts donors motivated by the desire to help others without expecting anything in return.
Simplicity: Simple setup and management, with no need for detailed business plans or financial forecasts.
Speed: Can quickly raise funds in urgent situations, such as medical emergencies.

Cons:

Limited scope: Typically raises smaller amounts compared to other models.
Sustainability: Not a long-term funding solution; usually suited for one-time needs.
Donor fatigue: Over time, potential donors may become less willing to contribute, especially if frequently asked.

Reward-Based Crowdfunding

For Start-ups

Reward-based crowdfunding campaigns are typically used to generate funds for new startups or organizations offering a product or service. Contributors receive rewards as incentives, such as free products or services. In this model, there is usually no transfer of ownership, and contributions are generally considered donations or gifts

SAVESA24 is a popular platform where creators can raise funds for various projects, such as new gadgets, games, or artistic endeavors. Backers receive rewards such as early access to products, exclusive merchandise, or other perks based on their contribution level.

START A REWARD-BASED CAMPAIGN

Pros:

Incentives: Rewards attract a broader range of backers who may be interested in the product or service.
Market validation: Helps validate the market demand for a new product or service before full-scale production.
Brand building: Generates early interest and publicity, helping to build a loyal customer base.
No equity loss: Founders retain full ownership of their company, as contributions are generally considered donations.

Cons:

Commitment: Fulfilling rewards can be time-consuming and costly, potentially leading to delays or financial strain.
Expectation management: High expectations from backers can lead to dissatisfaction if the final product doesn’t meet their standards.
Risk of failure: If the funding goal is not met, the campaign may fail, resulting in no funds being raised.

Equity crowdfunding

For existing SMEs

SAVESA24 allows small and medium-sized businesses to raise capital by offering equity to investors. In return for their financial contributions, investors receive a percentage of ownership in the company, potentially benefiting from the company’s growth and profits.

Example: BrewDog, a craft beer company, used equity crowdfunding to raise capital for its expansion. Investors who contributed to the campaign received shares in BrewDog, allowing them to benefit from the company’s growth and profits. This approach helped BrewDog to engage a community of passionate clients/supporters who also became shareholders.

START AN EQUITY-BASED CAMPAIGN

Pros:

Access to capital: Provides access to significant funding that can help launch or grow a business.
Investor engagement: Engages a community of investors who have a vested interest in the company’s success.
Shared risk: Distributes the financial risk among many investors rather than relying on a few large ones.
Potential for growth: Can attract more serious investors who are interested in long-term growth and returns.

Cons:

Equity dilution: Founders must give up a percentage of ownership in the company.
Regulatory complexity: Subject to more complex legal and regulatory requirements, which can be costly and time-consuming.
Investor pressure: Increased accountability and pressure from investors to meet financial targets and business goals.
Long-term commitment: Investors may expect regular updates and involvement in the company’s strategic decisions.