Page 147 - Social Enterprise A New Business Paradigm for Thailand

professional networks, such as friends, family, customers, and individual investors. The capital
raised is often used to support a wide range of initiatives, including creative projects, business

startups, charitable causes, or even personal expenses. Most crowdfunding campaigns are
conducted through online platforms, which facilitate public access and participation.

There are four main types of crowdfunding:

5.1) Reward-Based Crowdfunding
In this model, entrepreneurs solicit funding from a broad base of contributors in exchange for
non-financial rewards. These rewards may include products, services, or other perks that
correspond to the amount contributed. Typically, the rewards are linked to goods or services still
in development. This form of crowdfunding is particularly popular among startups and small
businesses because it enables them to raise capital without giving up equity or taking on debt. It

also allows them to test the market and build customer engagement early in the product lifecycle.

5.2) Equity Crowdfunding
Equity crowdfunding allows startups or early-stage companies to offer shares in their business to
a large group of investors via an online platform. In return for their investment, contributors
receive an ownership stake in the company. This model gives investors the opportunity to
participate in the company’s future growth, share in its profits, and potentially benefit from
increased equity value. However, it also involves higher risk, as early-stage ventures are more
vulnerable to failure.

5.3) Debt Crowdfunding (Peer-to-Peer Lending)
Also known as peer-to-peer lending, this model involves individuals or businesses borrowing
money from a large number of investors through online platforms. Lenders provide capital with
the expectation that it will be repaid with interest over a predetermined period. This model serves
as an alternative to traditional bank loans and can help borrowers who may not qualify for
conventional financing. It also offers investors a predictable return, albeit with some level of
default risk.

5.4) Donation-Based Crowdfunding
This model involves fundraising for projects, businesses, or charitable causes by inviting a large
number of people to contribute small amounts of money. Donors who provide financial support
do so without receiving any financial return, interest, or ownership rights in exchange. Examples
of companies or organizations that operate using this type of financial instrument will be
discussed in the following section.

In summary, the investment landscape within the social enterprise ecosystem includes a wide
spectrum of investors, each with their own persona and preferences. Consequently, they tend to

favor different types of financial instruments. Figure 4.4 illustrates these distinctions, showing

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