Crowdfunding is generally defined as an internet-based collective effort between people who pool money to help fund an activity or an entrepreneurial endeavor. Also called crowdsourcing, crowdfunding is used to underwrite a variety of activities, including new products, artistic efforts, political campaigns or scientific research, just to name a few. In return, if a product or project actually gets developed and produced, investors often either receive the final product, a portion of the profits or small shares of equity.
In their May 2012 Crowdfunding Industry Report, Crowdsourcing.org reports that about $1.5 billion dollars was raised via crowdfunding in 2011. Crowdfunding platforms (CFPs) like Kickstarter and global site Indiegogo facilitate crowdfunding efforts with big number successes; since 2009, Kickstarter has raised over $250 million in pledges while Indiegogo has funded over 100,000 projects from more than 196 countries. Given the rising popularity of crowdfunding, it’s not surprising that the number of CFPs is expected to increase to 530 by December 2012, up from the last count of 452 in April 2012.