The most recent buzzword around our office space Toronto is “crowdfunding.” The Internet and social media are truly changing how charitable groups and small businesses are generating funding for causes or special projects. It seems that the concept of crowdfuning is truly taking off.
So now you are asking, what is crowdfunding? Essentially, crowdfunding is the concept of asking a crowd of people to donate a defined or undefined amount of money for a specific cause or project in exchange for various rewards – or even just karma.
According to a former Telsec Toronto virtual office client (now office space client) crowdfunding can sometimes be alternatively called crowd financing, or equity crowdfunding. It is a concept where a collective effort of individuals networks and pools their resources, usually via the social network over the Internet, to support efforts initiated by other people or organizations. Crowdfunding can be used to help or support a wide variety of activities and projects, including helping a Telsec client move from having a virtual office Toronto to having a physical Toronto office space by growing his business.
The early examples of crowdfuning have included disaster relief, showing of support of an artist by his or her fans, grassroot political campaigns or movements, financing the making of an independent film – even scientific research by scientists who are not part of a large company or university.
Essentially there are three main categories crowdfunding can fall under: Donation-based crowdfunding, Debt-based crowdfunding, and Equity-based crowdfunding.
Donation-based crowdfunding involves asking a crowd to donate to your project in exchange for some for of tangible goods that are essentially non-monetary rewards. While the ideas and types of goods are endless, the most popular are items like t-shirts, pre-market product samples, or even a gift of the finished product.
Debt-based crowdfunding would involve asking a crowd to donate to your business or business project in exchange for some form of financial return and/or interest on money loaned at some point in the future.
Equity-based crowdfunding would be asking a crowd to donate to your business or project in exchange for an equity share in the project or the business.
Each can be done separately and some can be done in conjunction with other initiatives.
There is a growing trend for small businesses to use crowdfunding to grow their business so they can get out of their basement or garage office space and into a real office space. Even those start-ups who do not need physical office space (but realize that a good business address is important) are exploring the concept of a Toronto mail service or a full Toronto virtual office solution.