Mass Financing Example

The mass financing, is a form of financing in which capital is received from different parties (people, investors, entrepreneurs, or credits). It has both advantages and disadvantages, since investors can lose their capital because the investment is usually high risk but in contraposition, they can be left out of taxes and liens.

The use of these investments is usually in small and micro companies, and the order is usually family and friends, although It can also be done through micro donations as happens with altruistic foundations, who also serve of the "micro-crowdfunding " or mass financing.

There are different names for mass financing:

• Crowdfunding
• Collective financing
• Micro crowdfunding
• Crowdfunding
• Baquiata (only in Mexico)
• Voluntary cooperation.

Example of mass financing:

A small group of researchers from a university are planning the creation of a new company, the turn of the company will be soft drinks for diabetics; To achieve its mission, it needs to acquire the material for the preparation of the soft drink and the registration with the secretary of health.

For this reason, it has carried out a campaign through social networks in which it gives an account number so that they donate the amount possible after registering; This message is exclusively reserved for university students.

As this donation is merely voluntary, they are given the benefit of being named as patrons of the company and will receive their dividends at the most opportune moment, in the proportional manner and fair.

The capital will be used in a strategic way, for the elaboration of the product, the rent of the premises for the elaboration, and the promotion and distribution efforts for its commercialization.