{"id":1038,"date":"2022-10-28T04:33:11","date_gmt":"2022-10-28T04:33:11","guid":{"rendered":"https:\/\/crowdwavetrust.org\/blog\/?p=1038"},"modified":"2023-07-20T07:25:16","modified_gmt":"2023-07-20T07:25:16","slug":"types-of-legal-crowdfunding-india","status":"publish","type":"post","link":"https:\/\/crowdwavetrust.org\/blog\/types-of-legal-crowdfunding-india\/","title":{"rendered":"Different Types Of Crowdfunding That Are Legal In India"},"content":{"rendered":"<div id=\"toc_container\" class=\"no_bullets\"><p class=\"toc_title\">Contents<\/p><ul class=\"toc_list\"><li><a href=\"#What_is_Online_Crowdfunding\"><span class=\"toc_number toc_depth_1\">1<\/span> What is Online Crowdfunding?<\/a><\/li><li><a href=\"#Benefits_of_Online_Crowdfunding\"><span class=\"toc_number toc_depth_1\">2<\/span> Benefits of Online Crowdfunding<\/a><\/li><li><a href=\"#What_are_the_Types_of_Crowdfunding_That_are_Legal_in_India\"><span class=\"toc_number toc_depth_1\">3<\/span> What are the Types of Crowdfunding That are Legal in India?<\/a><ul><li><a href=\"#1_Donation-Based_Crowdfunding\"><span class=\"toc_number toc_depth_2\">3.1<\/span> 1. Donation-Based Crowdfunding<\/a><\/li><li><a href=\"#2_Reward-Based_Crowdfunding\"><span class=\"toc_number toc_depth_2\">3.2<\/span> 2. Reward-Based Crowdfunding<\/a><\/li><li><a href=\"#3_Debt-Based_Crowdfunding\"><span class=\"toc_number toc_depth_2\">3.3<\/span> 3. Debt-Based Crowdfunding<\/a><\/li><li><a href=\"#4_Litigation-Based_Crowdfunding\"><span class=\"toc_number toc_depth_2\">3.4<\/span> 4. Litigation-Based Crowdfunding<\/a><\/li><\/ul><\/li><li><a href=\"#How_To_Create_An_Online_Crowdfunding_Campaign\"><span class=\"toc_number toc_depth_1\">4<\/span> How To Create An Online Crowdfunding Campaign<\/a><\/li><li><a href=\"#Crowdfunding_That_is_Illegal_in_India\"><span class=\"toc_number toc_depth_1\">5<\/span> Crowdfunding That is Illegal in India<\/a><ul><li><a href=\"#1Equity-Based_Crowdfunding\"><span class=\"toc_number toc_depth_2\">5.1<\/span> 1.\u00a0Equity-Based Crowdfunding<\/a><\/li><\/ul><\/li><li><a href=\"#Why_Should_You_Carry_Out_Crowdfunding_Using_Crowdwave_Trust\"><span class=\"toc_number toc_depth_1\">6<\/span> Why Should You Carry Out Crowdfunding Using Crowdwave Trust?<\/a><\/li><li><a href=\"#FAQs\"><span class=\"toc_number toc_depth_1\">7<\/span> FAQs<\/a><\/li><\/ul><\/div>\n<h2><span id=\"What_is_Online_Crowdfunding\"><span style=\"color: #000000;\">What is Online Crowdfunding?<\/span><\/span><\/h2>\n<p><span style=\"font-weight: 400; color: #000000;\">Crowdfunding is a way of raising funds by reaching out to a large population of people. Crowdfunding has become a popular way to raise money for a wide variety of projects and ventures. By soliciting funds from a large number of people online, crowdfunding allows people to tap into a vast pool of potential donors. This method of funding has been used to finance everything from start-up businesses to charitable causes.<\/span><\/p>\n<h2><span id=\"Benefits_of_Online_Crowdfunding\"><span style=\"color: #000000;\">Benefits of Online Crowdfunding<\/span><\/span><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400; color: #000000;\">Online crowdfunding is the easiest yet most effective way to raise funds.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400; color: #000000;\">It helps generate global funds.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\"><span style=\"color: #000000;\">Cost-effectiveness is one of the notable entities of<\/span> <a href=\"https:\/\/crowdwavetrust.org\/blog\/benefits-of-online-fundraising-in-india\/\">online fundraising<\/a>.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\"><span style=\"color: #000000;\">It is much easier to reach the target funds by making use of an online crowdfunding campaign.\u00a0<\/span><\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400; color: #000000;\">Online crowdfunding is a secure way of raising funds and is less susceptible to fraudulent activities.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400; color: #000000;\">It yields better funds and campaign results for various causes and effectively creates awareness.\u00a0<\/span><\/li>\n<\/ul>\n<h2><span id=\"What_are_the_Types_of_Crowdfunding_That_are_Legal_in_India\"><span style=\"color: #000000;\">What are the Types of Crowdfunding That are Legal in India?<\/span><\/span><\/h2>\n<h3><span id=\"1_Donation-Based_Crowdfunding\"><span style=\"color: #000000;\">1. Donation-Based Crowdfunding<\/span><\/span><\/h3>\n<figure id=\"attachment_1657\" aria-describedby=\"caption-attachment-1657\" style=\"width: 800px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-1657 size-full\" src=\"https:\/\/crowdwavetrust.org\/blog\/wp-content\/uploads\/2022\/10\/donation-based-crowdfunding.jpg\" alt=\"donation based crowdfunding\" width=\"800\" height=\"400\" srcset=\"https:\/\/crowdwavetrust.org\/blog\/wp-content\/uploads\/2022\/10\/donation-based-crowdfunding.jpg 800w, https:\/\/crowdwavetrust.org\/blog\/wp-content\/uploads\/2022\/10\/donation-based-crowdfunding-300x150.jpg 300w, https:\/\/crowdwavetrust.org\/blog\/wp-content\/uploads\/2022\/10\/donation-based-crowdfunding-768x384.jpg 768w\" sizes=\"auto, (max-width: 800px) 100vw, 800px\" \/><figcaption id=\"caption-attachment-1657\" class=\"wp-caption-text\">Donation Based Crowdfunding<\/figcaption><\/figure>\n<p><span style=\"font-weight: 400;\"><span style=\"color: #000000;\">Donation-based crowdfunding is mostly carried out for charitable purposes and social causes. This is one of the most common types of<\/span> <a href=\"https:\/\/crowdwavetrust.org\/blog\/crowdfunding-in-india\/\">crowdfunding that are legal in India<\/a>. <span style=\"color: #000000;\">Numerous NGOs and charitable organizations are making use of donation-based crowdfunding activities to raise funds for various causes. This is one of the most common types of crowdfunding that are legal in India.\u00a0<\/span><\/span><\/p>\n<p><span style=\"font-weight: 400; color: #000000;\">Donation-based crowdfunding is a great way to raise money for charitable purposes. By setting up a donation-based campaign, you can solicit donations from friends, family, and strangers who are willing to support your cause. This type of crowdfunding is often used to raise funds for numerous social causes like medical assistance, childcare, education, poverty, and much more.\u00a0<\/span><\/p>\n<h3><span id=\"2_Reward-Based_Crowdfunding\"><span style=\"color: #000000;\">2. Reward-Based Crowdfunding<\/span><\/span><\/h3>\n<figure id=\"attachment_1658\" aria-describedby=\"caption-attachment-1658\" style=\"width: 800px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-1658 size-full\" src=\"https:\/\/crowdwavetrust.org\/blog\/wp-content\/uploads\/2022\/10\/reward-based-crowdfunding.jpg\" alt=\"reward based crowdfunding\" width=\"800\" height=\"400\" srcset=\"https:\/\/crowdwavetrust.org\/blog\/wp-content\/uploads\/2022\/10\/reward-based-crowdfunding.jpg 800w, https:\/\/crowdwavetrust.org\/blog\/wp-content\/uploads\/2022\/10\/reward-based-crowdfunding-300x150.jpg 300w, https:\/\/crowdwavetrust.org\/blog\/wp-content\/uploads\/2022\/10\/reward-based-crowdfunding-768x384.jpg 768w\" sizes=\"auto, (max-width: 800px) 100vw, 800px\" \/><figcaption id=\"caption-attachment-1658\" class=\"wp-caption-text\">Reward Based Crowdfunding<\/figcaption><\/figure>\n<p><span style=\"font-weight: 400; color: #000000;\">In reward-based crowdfunding, crowdfunding takes place in a two-way process. The individuals contribute funds to a cause in return for a reward. In this case, the recipient is not obligated to return the funds that the donators provide but rather is compensated with goods or services.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400; color: #000000;\">Reward-based funding is also called seed funding. In this type of crowdfunding, the crowdfunding takes place on the basis of an in-house reward exchange. Out of all the types of crowdfunding that are legal in India, this provides a win-win situation for the receiver.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400; color: #000000;\">Business ventures can effectively make use of this type of crowdfunding to kickstart their company. Reward-based crowdfunding can also be used as a marketing tool as the companies will sell their products and services to their funders.\u00a0<\/span><\/p>\n<h3><span id=\"3_Debt-Based_Crowdfunding\"><span style=\"color: #000000;\">3. Debt-Based Crowdfunding<\/span><\/span><\/h3>\n<figure id=\"attachment_1659\" aria-describedby=\"caption-attachment-1659\" style=\"width: 800px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-1659 size-full\" src=\"https:\/\/crowdwavetrust.org\/blog\/wp-content\/uploads\/2022\/10\/debt-based-crowdfunding.jpg\" alt=\"debt based crowdfunding\" width=\"800\" height=\"400\" srcset=\"https:\/\/crowdwavetrust.org\/blog\/wp-content\/uploads\/2022\/10\/debt-based-crowdfunding.jpg 800w, https:\/\/crowdwavetrust.org\/blog\/wp-content\/uploads\/2022\/10\/debt-based-crowdfunding-300x150.jpg 300w, https:\/\/crowdwavetrust.org\/blog\/wp-content\/uploads\/2022\/10\/debt-based-crowdfunding-768x384.jpg 768w\" sizes=\"auto, (max-width: 800px) 100vw, 800px\" \/><figcaption id=\"caption-attachment-1659\" class=\"wp-caption-text\">Debt Based Crowdfunding<\/figcaption><\/figure>\n<p><span style=\"font-weight: 400; color: #000000;\">Debt-based crowdfunding is when the recipient borrows funds from numerous sources through crowdfunding. As the name itself suggests that it is debt-based crowdfunding, the funds collected shall be returned to the lenders with interest amounts.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400; color: #000000;\">It is also called as peer to peer lending. In general debt-based crowdfunding will help on a larger scale as it can be a much better option than receiving loans from banks. This is an effective way of raising capital for your potential or ongoing businesses and is one of the best types of crowdfunding that are legal in India.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400; color: #000000;\">Only avail of debt-based crowdfunding if you have a steady cash flow and are sure that you can repay the amount back as it involves many funders. It is wise to avail of debt-based crowdfunding at a low-interest rate as it makes it easier to pay back the funds.\u00a0<\/span><\/p>\n<h3><span id=\"4_Litigation-Based_Crowdfunding\"><span style=\"color: #000000;\">4. Litigation-Based Crowdfunding<\/span><\/span><\/h3>\n<figure id=\"attachment_1660\" aria-describedby=\"caption-attachment-1660\" style=\"width: 800px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-1660 size-full\" src=\"https:\/\/crowdwavetrust.org\/blog\/wp-content\/uploads\/2022\/10\/litigation-based-crowdfunding.jpg\" alt=\"litigation based crowdfunding\" width=\"800\" height=\"400\" srcset=\"https:\/\/crowdwavetrust.org\/blog\/wp-content\/uploads\/2022\/10\/litigation-based-crowdfunding.jpg 800w, https:\/\/crowdwavetrust.org\/blog\/wp-content\/uploads\/2022\/10\/litigation-based-crowdfunding-300x150.jpg 300w, https:\/\/crowdwavetrust.org\/blog\/wp-content\/uploads\/2022\/10\/litigation-based-crowdfunding-768x384.jpg 768w\" sizes=\"auto, (max-width: 800px) 100vw, 800px\" \/><figcaption id=\"caption-attachment-1660\" class=\"wp-caption-text\">Litigation Based Crowdfunding<\/figcaption><\/figure>\n<p><span style=\"font-weight: 400; color: #000000;\">Litigation crowdfunding, in general, takes place in a confidential manner. In litigation crowdfunding, the plaintiffs receive funds through numerous sources like peers and other contacts, either in the form of donations or in the form of rewards.\u00a0<\/span><\/p>\n<p><span style=\"color: #000000;\"><span style=\"font-weight: 400;\">In this type of crowdfunding, the funders get back their rewards if the plaintiff succeeds in their case. Litigation crowdfunding is not a very common phenomenon in India but is carried out.\u00a0<\/span><span style=\"font-weight: 400;\">Litigation crowdfunding can be carried out by both businesses and individuals. In this situation, the funders will help out a litigant to raise funds to fight their case.\u00a0\u00a0<\/span><\/span><\/p>\n<p><span style=\"font-weight: 400; color: #000000;\">The above are a few of the types of crowdfunding that are legal in India.\u00a0<\/span><\/p>\n<h2><span id=\"How_To_Create_An_Online_Crowdfunding_Campaign\"><span style=\"color: #000000;\">How To Create An Online Crowdfunding Campaign<\/span><\/span><\/h2>\n<p><span style=\"font-weight: 400;\"><span style=\"color: #000000;\">All of these above crowdfunding activities can be carried out online by creating an online crowdfunding campaign. The recipient has to pick out a trustable<\/span> <a href=\"https:\/\/crowdwavetrust.org\/blog\/how-to-find-the-best-crowdfunding-platforms-in-india\/\">crowdfunding platform<\/a> <span style=\"color: #000000;\">and create a campaign providing the details of the cause, the target funds, the payment details and much more. Later, the crowdfunding campaign needs to be shared across for funds to pour in. The donations or funds made by numerous sources will get credited to the recipient&#8217;s account.\u00a0<\/span><\/span><\/p>\n<h2><span id=\"Crowdfunding_That_is_Illegal_in_India\"><span style=\"color: #000000;\">Crowdfunding That is Illegal in India<\/span><\/span><\/h2>\n<h3><span id=\"1Equity-Based_Crowdfunding\"><span style=\"color: #000000;\">1.\u00a0<b>Equity-Based Crowdfunding<\/b><\/span><\/span><\/h3>\n<figure id=\"attachment_1661\" aria-describedby=\"caption-attachment-1661\" style=\"width: 800px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-1661 size-full\" src=\"https:\/\/crowdwavetrust.org\/blog\/wp-content\/uploads\/2022\/10\/equity-based-crowdfunding.jpg\" alt=\"equity based crowdfunding\" width=\"800\" height=\"400\" srcset=\"https:\/\/crowdwavetrust.org\/blog\/wp-content\/uploads\/2022\/10\/equity-based-crowdfunding.jpg 800w, https:\/\/crowdwavetrust.org\/blog\/wp-content\/uploads\/2022\/10\/equity-based-crowdfunding-300x150.jpg 300w, https:\/\/crowdwavetrust.org\/blog\/wp-content\/uploads\/2022\/10\/equity-based-crowdfunding-768x384.jpg 768w\" sizes=\"auto, (max-width: 800px) 100vw, 800px\" \/><figcaption id=\"caption-attachment-1661\" class=\"wp-caption-text\">Equity Based Crowdfunding<\/figcaption><\/figure>\n<p><span style=\"color: #000000;\"><span style=\"font-weight: 400;\">According to the Securities and Exchange Board of India(SEBI), Equity-based crowdfunding is illegal in India. Equity-based funds are a way of raising funds from numerous sources in return for offering a share or stake in a business venture or company.\u00a0<\/span><span style=\"font-weight: 400;\">This is one of the types of crowdfunding in India that is not practised widely but is practised abroad.\u00a0<\/span><\/span><\/p>\n<h2><span id=\"Why_Should_You_Carry_Out_Crowdfunding_Using_Crowdwave_Trust\"><span style=\"color: #000000;\">Why Should You Carry Out Crowdfunding Using Crowdwave Trust?<\/span><\/span><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400; color: #000000;\">Crowdwave is one of the safest crowdfunding platforms that ensures a 100% secure payment<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400; color: #000000;\">Crowdwave has 0% hidden costs and provides an extremely transparent crowdfunding process.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400; color: #000000;\">Crowdwave is supportive of diverse causes and provides the right platform for different types of crowdfunding in India.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400; color: #000000;\">All the donations made through Crowdwave are eligible for tax exemption.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\"><span style=\"color: #000000;\">Numerous people have benefitted from<\/span> <a href=\"https:\/\/crowdwavetrust.org\/blog\/crowdwave-success-story-feeding-street-animals-in-chennai-during-lockdown\/\">Crowdwave and Crowdwave&#8217;s fundraiser success stories<\/a> <span style=\"color: #000000;\">are numerous.\u00a0<\/span><\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\"><span style=\"color: #000000;\">The above blog would have given you an idea of various types of crowdfunding in India that you can carry out to benefit your cause. If you are looking for the right crowdfunding platform to start your crowdfunding activities, then<\/span> <a href=\"https:\/\/crowdwavetrust.org\/\">Crowdwave<\/a> <span style=\"color: #000000;\">is the right space for you. If there are any suggestions or queries, let us know in the comments below.\u00a0<\/span><\/span><\/p>\n<h2 style=\"text-align: center;\"><span id=\"FAQs\">FAQs<\/span><\/h2>\n<p><strong>1. What are the different types of crowdfunding in India?<\/strong><br \/>\nIn India, there are four types of crowdfunding. They are donation-based, reward-based, equity-based and debt-based crowdfunding. Through these various forms, individuals and organisations can raise funds.<\/p>\n<p><strong>2. Is crowdfunding legal in India?<\/strong><br \/>\nYes, crowdfunding is legal in India. Though no specific regulations govern them, they are considered legal in India. However, SEBI (The Securities and Exchange Board of India) governs the equity crowdfunding since 2014.<\/p>\n<p><strong>3. Are there any restrictions on crowdfunding in India?<\/strong><br \/>\nThe crowdfunding platforms should register with SEBI (The Securities and Exchange Board of India). And there are restrictions to the amount an individual can invest through crowdfunding.<\/p>\n<p><strong>4. Which crowdfunding is illegal in India?<\/strong><br \/>\nCrowdfunding for the issuance of securities or equity-based crowdfunding is currently illegal in India.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Contents1 What is Online Crowdfunding?2 Benefits of Online Crowdfunding3 What are the Types of Crowdfunding That are Legal in India?3.1 1. Donation-Based Crowdfunding3.2 2. Reward-Based Crowdfunding3.3 3. Debt-Based Crowdfunding3.4 4. Litigation-Based Crowdfunding4 How To Create An Online Crowdfunding Campaign5 Crowdfunding That is Illegal in India5.1 1.\u00a0Equity-Based Crowdfunding6 Why Should You Carry Out Crowdfunding Using Crowdwave [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":2758,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[69,68],"class_list":["post-1038","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-crowdwave-trust","tag-different-types-of-crowdfunding-in-india","tag-different-types-of-legal-crowdfunding"],"_links":{"self":[{"href":"https:\/\/crowdwavetrust.org\/blog\/wp-json\/wp\/v2\/posts\/1038","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/crowdwavetrust.org\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/crowdwavetrust.org\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/crowdwavetrust.org\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/crowdwavetrust.org\/blog\/wp-json\/wp\/v2\/comments?post=1038"}],"version-history":[{"count":3,"href":"https:\/\/crowdwavetrust.org\/blog\/wp-json\/wp\/v2\/posts\/1038\/revisions"}],"predecessor-version":[{"id":3418,"href":"https:\/\/crowdwavetrust.org\/blog\/wp-json\/wp\/v2\/posts\/1038\/revisions\/3418"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/crowdwavetrust.org\/blog\/wp-json\/wp\/v2\/media\/2758"}],"wp:attachment":[{"href":"https:\/\/crowdwavetrust.org\/blog\/wp-json\/wp\/v2\/media?parent=1038"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/crowdwavetrust.org\/blog\/wp-json\/wp\/v2\/categories?post=1038"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/crowdwavetrust.org\/blog\/wp-json\/wp\/v2\/tags?post=1038"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}