Final answer:
The type of financing artists use to raise funds from fans and outsiders for projects like a DIY album is called crowdfunding. Unlike traditional methods involving the owner's funds or investments from angels or venture capitalists, crowdfunding pools small amounts from many contributors.
Step-by-step explanation:
The type of financing that solicits fans and other outsiders to make small contributions to fund a DIY album is known as crowdfunding. This method allows artists to raise money for their projects by reaching out to a large number of people, typically via the internet, where each person contributes a small amount. It stands in contrast to traditional forms of raising early-stage financial capital, which may involve dipping into the business owner's personal savings, using credit cards, borrowing money with collateral, or receiving investments from private investors like angel investors and venture capital firms. Angel investors are well-to-do individuals who often provide capital for small new companies at an early development stage in exchange for equity.