Q: What is Crowdfunding?

A: Crowdfunding is the practice of funding a project or venture by raising monetary contributions from a large number of people, typically via the internet. One early-stage equity expert described it as “the practice of raising funds from two or more people over the internet towards a common Service, Project, Product, Investment, Cause, and Experience or SPPICE.” 

The crowdfunding model is fueled by three types of actors: the project initiator who proposes the idea and/or project to be funded; individuals or groups who support the idea; and a moderating organization (the "platform") that brings the parties together to launch the idea. 

In 2013, the crowdfunding industry grew to be over $5.1 billion worldwide. 

Q: What Types of Crowdfunding are there?

A: Types of crowdfunding

The Crowdfunding Centre's May 2014 report identified the existence of two primary types of crowdfunding:

Reward-based crowdfunding: entrepreneurs pre-sell a product or service to launch a business concept without incurring debt or sacrificing equity/shares.

Equity-based crowdfunding: the backer receives unlisted shares of a company, usually in its early stages, in exchange for the money pledged. The company's success is determined by how successfully it can demonstrate its viability.[15]

Q: What Type of Crowdfunding is used to purchase apartment buildings?

A: Equity-based crowdfunding

Equity-based crowdfunding is the collective effort of individuals to support efforts initiated by other people or organizations through the provision of finance in the form of equity.In the United States, legislation that is mentioned in the 2012 JOBS Act will allow for a wider pool of small investors with fewer restrictions following the implementation of the act.

Real estate crowdfunding is the online pooling of capital from investors to fund real estate. Investment, via specialised online platforms, is completed under Title II of the JOBS Act and is limited to accredited investors. The Multifamilyinvestment.com platform specializes in crowdfunding for accredited investors.