Backer
A person who contributes money to a crowdfunding campaign. Backers support projects they believe in and typically receive rewards rather than financial returns.
Campaign
The fundraising effort for a specific project on a crowdfunding platform. Campaigns have defined goals, deadlines, and reward structures.
Equity
Ownership stake in a company, represented by shares. Equity holders are partial owners with rights to potential profits and company decisions.
Funding Goal
The target amount of money a campaign aims to raise. Some platforms use "all-or-nothing" where projects only receive funds if they meet their goal.
Interest Rate
The percentage charged on a loan, paid by the borrower to the lender. Higher rates typically reflect higher perceived risk.
Liquidity
How easily an asset can be converted to cash. Crowdfunding rewards are non-liquid. Equity investments are typically illiquid for years.
Platform
The digital service that facilitates collective financing transactions, connecting project creators with backers, borrowers with lenders, or companies with investors.
Principal
The original amount of money loaned or invested, not including interest or returns. In crowdlending, lenders expect to receive their principal back.
Risk Profile
An assessment of the likelihood that a borrower will repay a loan or an investment will succeed. Used to determine appropriate interest rates or investment terms.
Reward Tier
Different levels of contributions in crowdfunding campaigns, each offering different rewards. Higher tiers typically offer more valuable or exclusive rewards.
Shareholder
A person who owns equity shares in a company. Shareholders have ownership rights and may receive dividends if the company is profitable.
Default
When a borrower fails to make required loan payments. In crowdlending, defaults can result in partial or total loss for lenders.
Due Diligence
The research and investigation process before making an investment decision. Includes reviewing financials, business plans, and management teams.
Valuation
The estimated worth of a company. In equity crowdfunding, valuation determines how much equity investors receive for their money.
Exit Strategy
How investors plan to eventually sell their equity stake and realize returns. Common exits include company acquisition or public offering.
Dividend
A portion of company profits distributed to shareholders. Not all companies pay dividends, especially early-stage startups.
Peer-to-Peer (P2P)
Direct transactions between individuals without traditional institutional intermediaries. P2P lending connects borrowers and lenders directly.
Credit Score
A numerical assessment of a borrower's creditworthiness based on credit history. Used in crowdlending to evaluate risk and set interest rates.
Diversification
Spreading investments across multiple opportunities to reduce risk. In crowdlending, funding many small loans rather than one large loan.
ROI (Return on Investment)
A measure of profitability calculated as gain divided by initial investment. Not applicable to donation-based crowdfunding.
Startup
A newly established business, typically in early stages of development. Common recipients of equity crowdfunding investments.
Securities
Financial instruments representing ownership (equity) or debt obligations. Equity crowdfunding involves selling securities to investors.
Accredited Investor
An individual meeting specific income or net worth requirements, often having access to investment opportunities not available to general public.
Pitch
The presentation where a company explains its business to potential investors, highlighting opportunity, market, and growth potential.
Milestone
Specific achievement targets in a business plan or campaign. Some crowdfunding campaigns unlock stretch goals when hitting milestones.
Prototype
An early sample or model of a product used to test concepts. Many crowdfunding campaigns showcase prototypes to demonstrate feasibility.
Fulfillment
The process of delivering rewards to crowdfunding backers after a campaign succeeds and the product is produced.
Early Bird
Special reward tier in crowdfunding offering better value or exclusive perks to first backers, creating urgency and momentum.
Stretch Goal
Additional funding targets beyond the original goal that unlock extra features or improvements if reached.
Loan Term
The length of time a borrower has to repay a loan. Common terms in crowdlending range from months to several years.