The general understanding of ‘crowdfunding’ is formed through platforms such as KickStarter and GoFundMe. Those platforms, and the companies on them, use a donation, pre-order or rewards model to raise capital from the ‘crowd’ for the launch of a company’s particular product.

What we do here at FrontFundr is ‘Equity Crowdfunding’. It can contain all the features of the crowdfunding described above, as some of the companies listed on FrontFundr offer their product as perks for making an investment, but also introduces a new element; direct ownership or position in that company. Companies are able to generate all the hype associated with crowdfunding, but also empower these investors to become brand champions, with a vested interest in amplifying the reach of the company to new heights.
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There are essentially three kinds of crowdfunding: reward-based,

donation-based and securities-based.

Is when you contribute money and get a reward or product in return. This is mostly used for creative campaigns, and there are often different levels of rewards, or perks, that correspond to pledge amounts. Think Kickstarter and Indiegogo.

Is when a funder contributes to a campaign without expecting any perks or value in return. This is mostly used to fund charitable causes, like funding to build a hospital in Kenya, or personal expenses, like helping pay a friend’s medical bills. Think GoFundMe, YouCaring and CrowdRise.

Which includes accredited crowdfunding and open-access regulated crowdfunding.

Accredited crowdfunding allows companies to raise funds from high-net worth individuals and institutions. AngelList and FundersClub are two of the best examples of these platforms.

Open-access regulated crowdfunding invites anyone to invest in a company in exchange for a slice of the financial pie, or the right to money or future crypto-assets (you may get perks too). FrontFundr was one of the first licensed platforms to host this type of crowdfunding and find success in Canada.