Seeing as the financial alternatives continue to grow, today we will talk about Crowdfunding or micro patronage .

If you've never heard about this financing normally intended for entrepreneurs, then we are going to do it.

Also say that although it may be a financial option similar to Crowdlending (it also has a similar name) they are different.

Crowdfunding What is it?

Micro patronage called in English as Crowdfunding (it is the term commonly used here in the United States as well) is a type of financing designed for entrepreneurs where they get money thanks to the investments of a significant mass of investors.

In other words, it is about investment in business projects by tens, hundreds or thousands of investors who invest small amounts of money to finance an idea.

The proposal can be formulated in many ways, since it is not always investors who participate in the capital stock of the company as partners but sometimes act as lenders in exchange for a return.

What is certain is the high risk of these operations for the investors who invest here.

That is why it is said that Crowdfunding investors generally , rather than invest in search of profitability, do so with a social purpose (to help an entrepreneur to create his project)

This is the main reason why in practice only those projects with a social character or with a really important innovative level go ahead or are financed.

If you are an entrepreneur and you have in mind to go to Crowdfunding to get financing, you have to analyze your business in advance.

Is it a traditional business without any innovative character what you intend to carry out? If the answer is if Crowdfunding would not be within our recommendations.

You have to go to corporate Crowdfunding when our project makes a difference with respect to similar businesses. This is how interest is generated among investors.

Of course, the entire project has to be viable and can be demonstrated through the corresponding documentation.

We cannot and should not go to one of these financial platforms to process a business loan without having everything we need already prepared.

Types of Crowdfunding and micro-patronage?

Not only is business Crowdfunding being processed by entrepreneurs who want to carry out their business projects.

Within massive financing (it is also called this way) we can find different uses.

We also have, for example, solidarity Crowdfunding through which funds are raised for solidarity purposes such as NGOs, associations and others.

Lately, there have also been micro-patronage projects for musical artists who request funds for the production of their music, for example.

Something that by the way we are seeing more and more, if a musician has followers it is possible to go to them through projects like these so that they finance the production of their music.

There are more types but these would be the main ones.

Crowdfunding and conclusions

Either in the form of a loan or acting as capitalist partners, it is a form of massive financing where the main characteristic is the large number of participants in each project.

As a financing alternative, we see it as a good option, although, as with Crowdlending, it is not yet widely established in our country.

In Anglo-Saxon countries like the United States, for example, Crowdfunding is quite widespread.