Crowdfunding is a financing or capital raising scheme through a collective effort proposal in which friends, family, clients, and individual investors participate.
This financing type takes advantage of the collective effort of a large group of people, which can be managed through platforms such as social networks or platforms dedicated to collective financing, taking advantage of the mass media to disseminate the collection project.
There are three types of crowdfunding
Within the available financing models, it is possible to access three that can adapt to each type of project or need you are opting for.
These types of financing can be:
- Donation-Based Crowdfunding. This type of collection does not generate any financial return. It is a model frequently used in fundraising for non-profit organizations or charitable causes.
- Rewards-Based Crowdfunding. This financing model establishes some remuneration such as goods or services in exchange for the contribution.
- Equity Crowdfunding. It works through the sale of ownership shares, with which taxpayers can receive shares or participation within an organization.
This type of financing has gained great popularity thanks to its agile operation and access to people without a credit history.
There are several advantages you can obtain with this financing, such as:
- Using a scheme that helps you raise funds with a specific purpose, doing it flexibly, with a completely online model.
- It can be short-term far-reaching since it is an easy scheme to share through massive platforms such as social networks.
- Crowdsourcing is a model that works as ideal marketing and exposure for small businesses and promotes fundraising.
- It helps promote public relations, facilitates the transmission of information, and helps increase traffic on websites.
- This model allows the design of a unique profile through which it can channel each of the potential investors, minimizing the effort of working one by one.
- It is ideal for making a social proof, through which you can identify that other people have an interest in what you are developing.
- It helps drive social media traction, allowing handling a significant volume of sponsors for the collection process.
- It allows you to consolidate a support network through which you can finance each of your projects.
Nowadays, we can find different platforms dedicated to promoting financing campaigns, which have made crowdfunding an alternative accessible to all types of public in a less cumbersome way than what we would find in financial systems.
One of these platforms is Kiva, founded by Matt Flannery and Jessica Jackley in 2005, based in San Francisco, California. Kiva promotes crowdfunding projects.
What is Kiva?
Kiva is a non-profit organization dedicated to the collective financing of loans and the liberation of capital. It seeks to facilitate and make the dynamics more flexible through traditional financial methods.
Kiva is a versatile platform. You can finance different projects to promote an enterprise, pay for treatment, pay for your studies or grow your business.
This platform is available to borrowers in 80 countries worldwide, providing a reliable alternative to those without access to financial credit.
Who is Kiva for?
Kiva is a program accessible to any person, from students to entrepreneurs who do not have a credit history that qualifies them to access a financial loan.
It is an ideal model for those who are starting a business and need financial support. However, they do not have any limitations for other types of projects.
Some of the advantages of this platform are:
- According to the financing profile you are accessing, Kiva allows you to access funds with 0% interest on loans from $1,000 to $10,000.
- You can make contributions from a minimum amount of $25.
- It allows using a free marketing system in the case of new clients.
- The loan approval system is not based on a minimum credit score, conducive to speeding up the financing approval process.
To access financing through Kiva, you must complete a form available on the platform, in which it is possible to evaluate if you qualify for the loan.
The form available in Kiva also has a simulator that allows you to evaluate the viability of your project, allowing you to minimize the analysis times of your request.
Kiva works mainly through two types of financing:
Kiva operates through two fundamental modalities, which are:
- Private Financing. This type of financing is available to family, friends, or groups who have the possibility of making loans or donations of $25 and up. This type of financing may have a processing period of up to 15 days.
- Financing with public funds. This type of financing can be exposed on the official Kiva site, where borrowers can access information and lend. The process of this type of financing can take up to 30 days.
A third paid financing model applies, which is a model of repayment of your loan in Kiva, this type of financing can take up to 36 months.
What does the type of financing to choose depend on?
Some essential elements depend on this, such as:
- The type of project.
- The amount to be financed.
This will help you to access the one that best suits each type of request.