Definition for : Crowdfounding

Financing technique, used mainly by start ups, which tap thousands of people via the Internet for funds needed to start up their projects. The unit amounts contributed are small, usually a few hundred euros, but multiplied by thousands or tens of thousands of people, a company is able to get its hands on tens or hundreds of thousands of euros, which will enable it to launch or to test its concept/product/service, and then in a second phase to approach Venture capital firms and/or Business angels. Crowdfunding is a complement to or substitute for financing by an entrepreneur’s friends and family ("Love money")

For more details see Chapter 40 Setting up a company or financing start-ups of the Vernimme

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