Every year more and more budding entrepreneurs are turning to crowdfunding to raise the necessary finance to launch their new business or product. As the ‘crowd’ in the name implies, crowdfunding is all about lots of people donating smaller amounts of money. This can make it easier and quicker for entrepreneurs to raise money for their project as opposed to turning to traditional options such as venture capitalists.
The Benefits of Crowdfunding
One of the great things about crowdfunding is that by pitching your idea to a crowd you can gauge how much interest your project attracts. This can help you work out whether or not it will be a worthwhile venture.
Crowd funding also allows you to engage with your audience as they can provide feedback throughout the process and help with beta testing if give you them pre-release access.
Perhaps the most attractive aspect of crowdfunding is that it allows you to retain complete control of your company as opposed to venture capital where you often have to give you investor a share of your business.
The Potential Pitfalls of Crowdfunding
One of the major drawbacks about crowdfunding is the potential for plagiarism. By broadcasting details about your venture on the internet, there is always the risk that someone could copy your idea.
It is also important to remember that if your project does not successfully launch after receiving crowdfunding it can have a seriously negative impact on the your businesses reputation.
Popular Crowdfunding Websites
Many people who want to crowdsource funding for a project sign up to Kickstarter. It is free to register for a Kickstarter account and the company has very reasonable fees for using their platform. Perhaps the unique thing about the Kickstarter platform is that allows you to send rewards to donors according to the amount of funding that they provide you with.
Indiegogo is the world’s first and largest global crowdfunding website and is a popular choice for those looking to raise funds. Indiegogo allows investors and entrepreneurs to sign up for free. However, they do charge a fee for their services. The fee is subsidised for non-profit organisations and is also reduced if you are successful in reaching your finance goals, giving even more motivation to make your campaign successful.