Crowdfunding vs. crowdinvesting

The The major distinction between crowdfunding and crowdinvesting lies in the type of consideration and the expectations of the supporters:

Crowdfunding:

– Supporters give money to promote a project or idea.
– In return, they often receive a reward, such as a product, a service or a thank you, but they have no financial stake in the project.
– Example: You support a project on Kickstarter to develop a new gadget and receive the finished product as a reward.

Crowdinvesting:

– Investors give money to take a financial stake in the company.
– They receive shares or another form of participation in the company and can share in the profits or increase in value of the company.
– There is a financial risk: if the company is successful, the investors can earn money, but if it fails, they lose the money they invested.
– Example: You invest in a start-up and receive shares in the company, which can increase in value if it is successful.

To summarise: Crowdfunding is about support in return for rewards, crowdinvesting is about financial participation with the hope of profit.