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What is rewards-based crowdfunding?

Rewards-based crowdfunding is perhaps the most recognizable type of crowdfunding. This is due in large part to the success of early movers in the space, like Kickstarter and Indiegogo. Like most crowdfunding campaigns, rewards-based campaigns typically involve small dollar contributions from individuals to projects in return for some kind of reward. Unlike securities-based campaigns, contributors to rewards-based campaigns typically do not receive or expect any financial return for their contributions. Of course, there is nothing to prevent the combination of aspect of securities-based and rewards-based crowdfunding in a single campaign. Unlike donation-based campaigns, however, contributors to rewards-based campaigns do expect some return on their capital contribution. That return just generally comes in the form of a reward, which usually reflects the amount contributed.

Rewards can be anything and range from tee-shirts and coffee cups to early versions of a proof-of-concept product, like a new blender or the world’s coolest cooler.

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