Crowd funding has been widely known as an alternative way to fund your business. Crowd funding works both for starting a brand new business and expanding an established business. With the advancement of internet and social media, crowd funding starts to grow even bigger nowadays. In 2015, for example, crowd funding has been used to raise a total US$34 billion for all businesses in the entire world

Most crowd funding platforms are now available online, with almost 4,000 websites now open crowd funding service to everybody with a smart and brilliant business idea. Regarding the way these crowd funding platforms pay returns to their funders, this big amount of websites can be categorized into two big categories.

Reward-Based Crowd funding

Reward-Based Crowd funding is one type of crowd funding service that asks you to give your funders some sort of “rewards”, mostly based on the result of your business. For example, if you start a T-shirt company, once you get your crowd funding project fulfilled, you owed your funders (or also called “backers”) a T-shirt, a toolbag, or even a specially designed T-shirt from your company. These rewards are varied, based on the amount of fund your backers pay for you. Usually, backers with the most fund will get the most valuable reward and vice versa.

You can find this kind of crowd funding at Kick starter, Indiegogo, or Rocket Hub.

Equity Crowd funding

Different from Reward-Based Crowd funding, Equity Crowd funding makes you owed your backers a share of your company. So it is like your backers are now part of your company because they invest their money in your business. Of course, no certain rewards are given, but you still have to disclose some eligibility and responsibility to your backers. You may invite them to participate in your business meeting or you can pay them some dividends or annual bonuses.

Equity Crowd funding can be found at Seed Invest or Angel List.