NEW WAYS OF FUNDING PROJECTS C1.1

NEW WAYS OF FUNDING PROJECTS

MICROFINANCE

Microfinance is the provision of financial services (eg credit, saving, insurance, etc) to the poor or unbanked. Microfinance is most associated with microcredit or the lending of small loans to entrepreneurs in the developing world to either start or expand a business.

CROWDFUNDING

Crowdfunding allows the general public to either invest or give money to a particular project, initiative or organisation. Private individuals and for and non-profit organisations alike are using crowdfunding sites to pool usually small amounts of money to fund everything from films to medical research and socially responsible products.

CROWDFUNDING

One thing crowdfunding does do is to put power in the hands of individuals, allowing their collective impact to rival what big donors can do on their own.

BBC News Report on Crowdfunding

VOCABULARY1. Equity: the money value of a property/business after debts have been substracted: valor2. Crowdfunding is catching on fast: becoming popular 3. Bypass the banks: avoid the banks Watch the video: What do you understand? Take notes of the main ideas.

BBC News Report on Crowdfunding

Watch the video: What do you understand? People are turning more and more to crowdfunding to finance their projects. By turning to crowdfuning businesses are able to bypass the banks and raise money/get funds from ordinary people/donors. A gluten-free company is a roaring success. They needed funding to buy new machinery to meet demand but banks weren't interested. They raised 60,000 in 24 hours. How it works? Crowdfunding relies on lots of people making small investments/donations to raise large amounts of money. In return donors could get a reward (t-shirts, tickets), or earn interest plus get your initial investment back, or get a small stake (share, financial involvement in a business) in the company.

CROWDFUNDING QUESTIONS

1. Is crowdfunding the alternative to bank loans? 2. What are the advantages and disadvantages of crowdfunding?

DISADVANTAGES

ADVANTAGES

CROWDFUNDING QUESTIONS

1. Is crowdfunding the alternative to bank loans? 2. What are the advantages and disadvantages of crowdfunding?

DISADVANTAGES

ADVANTAGES

• less paperwork/red tape
• it's quick and easy to set a crowdfunding campaign
• great opportunity to see if your idea can make a profit: it shows people are willing to spend money on your idea.
• neither entrepreneurs nor investors take much risk. If your idea isn't successful, the money is given back to donors.
• it builds a community of loyal customers before the product has been launched.
• it's a great marketing tool. Your campaign across multiple social media channels.

• You're showing your idea to the world, it's public. Others might copy it.
• You're given a limited time to raise the amount of money you need. If you don't reach it, your idea goes away empty-handed.
• You still need help to set up a successful crowdfunding campaign.