{"id":8424,"date":"2021-01-04T14:34:10","date_gmt":"2021-01-04T14:34:10","guid":{"rendered":"https:\/\/bitsacard.com\/blog\/?p=8424"},"modified":"2026-08-27T08:57:34","modified_gmt":"2026-08-27T08:57:34","slug":"what-is-crowdfunding","status":"publish","type":"post","link":"https:\/\/bitsacard.com\/blog\/en\/what-is-crowdfunding","title":{"rendered":"What is crowdfunding and how does it work step by step"},"content":{"rendered":"

Launching a business or turning an idea into reality takes money, and it isn’t always there. Crowdfunding<\/strong> emerged precisely to solve this without depending on a bank loan or a single investor. Instead, many people contribute small amounts through an online platform until the project reaches the capital it needs.<\/p>\n

Across Europe it is now a well-established model, with dedicated platforms, a specific legal framework, and millions of euros mobilised every year. Let’s break down what it is, how it works, the types that exist, and what you should know before taking part as a creator or a backer.<\/p>\n

What crowdfunding is<\/h2>\n

Crowdfunding<\/strong>, or collective funding<\/strong>, is a way of raising money for a project through contributions from a large group of people. It usually happens through an online platform that acts as an intermediary between the person proposing the idea and those who decide to support it financially.<\/p>\n

In exchange for that contribution, backers can receive a specific reward, a stake in the business, interest on lent capital, or in some cases nothing beyond the satisfaction of having supported a cause. The type of return is precisely what defines each crowdfunding model.<\/p>\n

How crowdfunding works step by step<\/h2>\n

The process is nearly identical across most platforms. Someone with an idea presents it, sets a funding target and a deadline, and from there seeks public support.<\/p>\n

Operationally, the steps usually look like this:<\/p>\n

    \n
  1. Registration<\/strong> on the platform as project promoter.<\/li>\n
  2. Submission of the proposal<\/strong> with documentation, images, video, and financial targets.<\/li>\n
  3. Setting the timeframe<\/strong> during which the campaign will be open to contributions.<\/li>\n
  4. Definition of rewards<\/strong> or conditions tied to each contribution tier.<\/li>\n
  5. Collection and settlement<\/strong> once the target is reached, minus the platform’s commission.<\/li>\n<\/ol>\n

    If the campaign fails to meet its target within the deadline, most platforms automatically refund the contributions. This is known as the “all-or-nothing”<\/strong> model, common on Kickstarter, Verkami, and Ulule.<\/p>\n

    Types of crowdfunding<\/h2>\n

    Not all projects seek the same thing, and not all platforms work the same way. In practice, four main models can be distinguished.<\/p>\n

    Reward crowdfunding.<\/strong> Backers receive a product, service, or experience in exchange for their contribution. This is the model most associated with creative, tech, and consumer projects. Kickstarter and Verkami operate under this modality.<\/p>\n

    Donation crowdfunding.<\/strong> No financial or material return is offered. It is mainly used for social, health-related, or humanitarian causes. Platforms such as GoFundMe operate this way.<\/p>\n

    Equity crowdfunding.<\/strong> Backers receive a stake in the financed company and, with it, the possibility of a return if the business succeeds. Given its financial nature, it is subject to specific regulatory requirements.<\/p>\n

    Crowdlending, or lending-based crowdfunding.<\/strong> Backers lend money to a project or company in exchange for repayment with interest within an agreed timeframe. It functions as an alternative to traditional bank credit.<\/p>\n

    The most-used crowdfunding platforms<\/h2>\n

    Dozens of platforms are active, each with different focuses and fees. These are the ones that concentrate the largest volume of European projects.<\/p>\n

    Kickstarter.<\/strong> The international benchmark, having channelled more funds than any other platform in its category. It works on the reward and all-or-nothing model, with a 5% commission on successful campaigns. It leans heavily towards creative, tech, and design projects.<\/p>\n

    Ulule.<\/strong> A leader in European reward-based crowdfunding, with operations across France, Spain, Italy, and other European markets. Commissions range from around 6.67% to 8% depending on the payment method, and it accepts projects in virtually every field.<\/p>\n

    Verkami.<\/strong> A major Spanish platform for reward-based crowdfunding, particularly strong in cultural, publishing, music, and audiovisual projects. It charges a 5% commission on successful campaigns and runs on a standard 40-day cycle.<\/p>\n

    Beyond reward-based models, platforms such as Crowdcube (equity) or Mintos (crowdlending) are references in the European financial crowdfunding space.<\/p>\n

    The legal framework in Europe<\/h2>\n

    Financial crowdfunding, meaning any campaign that involves investment or lending, is regulated. Since November 2021, the Regulation (EU) 2020\/1503<\/a> harmonises the legal regime for these platforms across the European Union.<\/p>\n

    Authorised platforms are supervised by the corresponding national authority in each country and by the European Securities and Markets Authority (ESMA)<\/a>. They must meet requirements around disclosure, transparency, and investor protection.<\/p>\n

    Reward and donation crowdfunding fall outside this financial regulation, though platforms remain subject to general rules on e-commerce, data protection, and consumer rights.<\/p>\n

    Advantages and risks worth considering<\/h2>\n

    For someone launching a project, crowdfunding allows validating an idea before producing it<\/strong>, building a community around the brand, and securing funding without giving up control or taking on bank debt. For backers, it offers access to exclusive products, meaningful causes, or investment opportunities that used to be reserved for other profiles.<\/p>\n

    Risks exist too. In reward crowdfunding, projects can be delayed or fail to deliver. In equity and crowdlending, there is a real risk of total loss of the capital contributed<\/strong> if the business fails. Before contributing, it is worth checking the promoter’s track record, the committed timelines, the platform’s terms, and, in investment cases, its authorisation by the relevant regulator.<\/p>\n

    How to contribute safely on a crowdfunding platform<\/h2>\n

    Crowdfunding platforms operate entirely online and collect contributions by card or bank transfer. Using a dedicated card for these payments helps keep finances separate and limits exposure should a platform ever be compromised.<\/p>\n

    The Bitsa card<\/a> is a prepaid Visa card with an associated IBAN that<\/p>\n","protected":false},"excerpt":{"rendered":"

    Crowdfunding raises funds for a project through many small online contributions. Discover its 4 types and the platforms most used across Europe.<\/p>\n","protected":false},"author":27,"featured_media":8427,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[262,264],"tags":[],"class_list":["post-8424","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-en","category-finance-en"],"_links":{"self":[{"href":"https:\/\/bitsacard.com\/blog\/en\/wp-json\/wp\/v2\/posts\/8424","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitsacard.com\/blog\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitsacard.com\/blog\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitsacard.com\/blog\/en\/wp-json\/wp\/v2\/users\/27"}],"replies":[{"embeddable":true,"href":"https:\/\/bitsacard.com\/blog\/en\/wp-json\/wp\/v2\/comments?post=8424"}],"version-history":[{"count":4,"href":"https:\/\/bitsacard.com\/blog\/en\/wp-json\/wp\/v2\/posts\/8424\/revisions"}],"predecessor-version":[{"id":22723,"href":"https:\/\/bitsacard.com\/blog\/en\/wp-json\/wp\/v2\/posts\/8424\/revisions\/22723"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitsacard.com\/blog\/en\/wp-json\/wp\/v2\/media\/8427"}],"wp:attachment":[{"href":"https:\/\/bitsacard.com\/blog\/en\/wp-json\/wp\/v2\/media?parent=8424"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitsacard.com\/blog\/en\/wp-json\/wp\/v2\/categories?post=8424"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitsacard.com\/blog\/en\/wp-json\/wp\/v2\/tags?post=8424"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}