Pledgecamp is one of the most exciting projects out there in the marketplace. By leveraging the blockchain technology and smart contracts, Pledgecamp plans to usher in the era of “Crowdfunding 2.0.” Backers lie at the very core of this revolutionary new ideology. Pledgecamp realizes that backer welfare is critical for the smooth-functioning a crowdfunding ecosystem. However, many people still wrongly refer to backers as “investors.” In this article, we are going to understand the differences between investors and backers. We will also explore the organic relationship that backers will have with the Pledgecamp ecosystem.

Investors vs. Backers: The Difference

Firstly, there is a fundamental difference between the act of investing and backing. Investors are people who give their money to products on an equity crowdfunding platform, like Investable or Angel List. They have carefully studied the company and the product and realized that it has some potential. In return for their investment, they receive some equity within the company. Major investors will also have a significant say in the direction that the product is going and what can be expected of it in the future.

Backers come from a completely different mindset. They contribute to a crowdfunding campaign on sites like Kickstarter and IndieGoGo. As a backer, either you are donating your money for a reward, or you are pre-buying the product. In this case, you are a backer of the project. There is also another key difference between the two concepts. Since investing is considered a lot more “professional,” the projects that get listed on investing platforms have all been vetted carefully and thoroughly. The projects face some severe ramifications if they try to scam their investors. Also, the barrier-for-entry in these platforms is usually very high. Investable - an accredited equity platform based out of Hong Kong - requires minimum investments of $10,000 and has an “invite-only” policy.

Simple crowdfunding, on the other hand, has a much more relaxed policy. There are practically no barrier-to-entry for both the project and the backers. The projects face little-to-no vetting and the backers can invest whatever they want. However, because of this, many projects in platforms like Kickstarter and Indiegogo were able to scam their backers successfully.

Pledgecamp is leveraging smart contracts to bring a crowdfunding ecosystem which:
● Doesn’t put unreasonable barriers-to-entry on the backers.
● Protects the backers from scammy projects.

Backer protection on Pledgecamp

Smart contracts are self-executing agreements which run on top of the blockchain technology. Smart contracts run on IF-THEN logic. This means that each statement of the smart contract will execute only if the preceding statement has been executed. This is how Pledgecamp leverages them:
● Backers enter into a smart contract with the project creator.
● A part of the backers’ funds gets locked up in an escrow. This escrow is
called “Backer Insurance.”
● Creators will receive these locked-up funds only when they have
accomplished certain milestones. These milestones will be pre-determined beforehand.

Backers and Moderation

Pledgecamp uses two tokens, PLG and Camp Share (CS). PLG is an ERC-20 utility token which is used to pay for and reward various services within the ecosystem. If a user chooses to stake their PLG tokens, then they will be rewarded with the CS tokens. A Camp Share is a non-exchange token that allows users to achieve Moderator status and earn compensation from the listing fees collected by the platform.

Moderators maintain the overall health and well-being of the Pledgecamp ecosystem by removing behavior violations. For their services, the total campaign listing fees generated within the system is shared among the Moderators.

Conclusion

Backers are the heart and soul of Pledgecamp. By creating a crowdfunding platform with a “backer first” philosophy and empowering them to take moderating duties within the ecosystem, backers genuinely are the heart and soul of Pledgecamp.

We hope that this article has made it clear why it won’t be prudent to call backers, investors. Backers don’t get equity, and nor do they get administrative powers within the company creating a product. They donate their money because they are excited about the potential of the product. Investors, on the other hand, purse through thoroughly vetted projects and invest in the ones that they feel has the most growth potential.