📊 Types of Crowdfunding

1. Reward-Based Crowdfunding

   • Supporters receive a product, service, or experience in return for their contribution.

   • It’s widely used to launch consumer products, tech gadgets, or creative projects.

   • ✅ Legal in India

2. Social/Donation-Based Crowdfunding

   • People contribute to causes like medical emergencies, education, or social impact projects without expecting any return.

   • ✅ Legal in India when compliant with tax laws, IT Act, and FCRA (in case of foreign donations)

3. Equity-Based Crowdfunding

   • Contributors invest in exchange for equity (shares) in the business.

   • ❌ Not legal in India for the public

   • SEBI has not approved this model for general investors due to concerns around investor protection and disclosure norms

4. Debt-Based (Peer-to-Peer) Lending

   • Contributors lend money to others with an expectation of repayment and interest

   • ❌ Illegal in India as a crowdfunding model

   • Peer-to-peer lending must be conducted only through RBI-registered NBFC-P2P platforms, not via crowdfunding routes

🇮🇳 What’s Legal in India?

🔍 SEBI’s View on Crowdfunding

The Securities and Exchange Board of India (SEBI) released a consultation paper in 2014 to explore equity crowdfunding. However:

• SEBI has not approved equity-based crowdfunding for the general public

• Public solicitation of equity investments remains prohibited unless routed through SEBI-regulated mechanisms like IPOs or AIFs

• The primary concern is investor risk, lack of disclosure, and unregulated market practices

Reward and donation-based crowdfunding do not fall under SEBI's scope, as long as they do not offer financial returns or securities.

🙌 Popular Social-Based Crowdfunding Platforms in India

Here are some legal and active donation-based platforms:

• Ketto.org – Medical & emergency fundraising

• Milaap.org – Education, personal, and social causes

• ImpactGuru.com – Healthcare and NGO fundraising

• FuelADream.com – Causes, education, and personal support

These platforms follow IT and tax laws and don’t promise financial returns.

🚀 What is BackingBay?

BackingBay is India’s first and only dedicated reward-based crowdfunding platform that empowers startups, D2C brands, creators, and innovators to raise funds via product pre-orders or service rewards.

Why BackingBay is 100% Legal:

• Operates strictly under the reward-based model

• Offers products or experiences in return — not equity or money-back guarantees

• Fully aligned with Indian laws such as the Indian Contract Act, IT Act, and GST norms

• No financial instruments or investments involved

🧩 Conclusion

Yes, crowdfunding is legal in India — but only specific types.

• ❌ Equity and Debt-based crowdfunding are not permitted for the general public

• ✅ Reward-based and Donation-based models are legal, gaining popularity in India

• Platforms like BackingBay offer a safe, innovative, and legally compliant way to launch new ventures and test the market — without giving up equity or taking loans.