Despite the fact that “crowdfunding” is an English word, nevermind the various pronunciations and syllable emphases, it is a term with which many people may not be familiar. It is my goal, therefore, to define this concept for the everyday Internet user.
On Wednesday night, the term crowdfunding was defined as “financé par la foule”, or “financed by the crowd”. This shouldn’t come as a surprise to anyone who tried the logical process of breaking the compound word apart and arrived at the idea that crowd-funding would mean funding by a crowd. But how does this work, exactly?
As explained at the conference, the process for getting financial aid for an entrepreneurial endeavor via KissKiss BankBank is comprised of four essential parts. First, the creator presents his project (free of charge) to KissKiss BankBank. Second, if the proposed project is approved, the creator must choose a set number of days for fundraising (maximum of 90) and a target amount of money. If this amount is not reached, the investors who pledged funds are no longer responsible for their contributions. Third, if the project is a success, the creator maintains 100% of property rights. And finally, KissKiss BankBank receives a commission of 10% of the funds successfully raised.
Crowdfunding is rapidly gaining popularity. Rather than taking out a large loan or seeking a single large investor, crowdfunding solicits smaller investments from many parties. While it began as a way to support artists, social media has allowed the reach of crowdfunding to extend to business entrepreneurs, too. The sense of community that results from a group who pools funds to reach a common goal is complicated by the fact that these interactions are all conducted over the internet. This brings us to the topic of conversation that claimed La Cantine Wednesday night.