Just like there are many different kinds of capital round raises for businesses in all stages of growth, there are a variety of crowdfunding types. Which crowdfunding method an entrepreneur selects depends on the type of product or service they offer and their goals for growth.

The three primary types of crowdfunding are donation-based, rewards-based, and equity crowdfunding. This guide looks primarily at rewards-based and equity crowdfunding.

1. Donation-Based Crowdfunding

Broadly speaking, it’s correct to think of any crowdfunding campaign in which there is no financial return to the investors or contributors as donation-based crowdfunding.

Common donation-based crowdfunding initiatives include fundraising for disaster relief, charities...