CSF is different from donation-based or reward crowdfunding.
CSF or equity crowdfunding
CSF is a form of investment where people invest money in exchange for shares in a company. Buying shares (aka stocks, securities or equities) makes you a shareholder or part-owner of the company.
Shareholders often expect a return on their investment in the form of dividends or capital appreciation when the company is sold or goes public. However, their investment may increase or decrease in value depending on the performance of the company.
CSF is typically used by startups and small companies to raise capital to grow and scale their business.
Donation or reward crowdfunding
With donation or reward crowdfunding, you make a financial contribution without expecting ownership or financial return (although you may get a product).
Donation-based crowdfunding is often used to fund social and charitable causes, while reward-based crowdfunding is often used to raise funds for creative projects such as films, music, and inventions.
If you’re new to investing, the government's MoneySmart website has a good article on the different ways to buy and sell shares.
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