Capital is a much-needed resource which does not come easily to the entrepreneurs. It is very difficult for small businesses to acquire funds when most of the times VCs and banks reject their proposals. I this scenario of business-funding, a disruption can make a world of difference. One such disruption is the rise of crowdfunding.
Crowdfunding involves an online platform where a community of accredited and non-accredited investors contribute money towards a start-up or a non-profit or an individual to help them fulfil their causes. In the past few years, crowdfunding in India has become quite popular among indie developers, filmmakers, non-profit organizations and many others.
There are several crowdfunding sites in India, such as Impact Guru, Milaap, Wishberry, Ketto, Catapooolt, and others. In this article, we will talk about the benefits one can get from using a crowdfunding site to raise money.
- Crowdfunding sites are the easiest way to access money and people willing to donate money. At an early stage of a business, it is often difficult for an entrepreneur to get funding from traditional sources like banks or accredited investors and venture capitalists. A crowdfunding site provides them with a large pool of people who are willing to invest small sums together to raise a large amount of money. In this case, an entrepreneur is not expected to give up equity from their business but provide the backers with some rewards as a way of showing gratitude.
- Starting up a business can be very dicey and challenging. While funding can be the main cause of concern in a new business, there are other reasons that can be equally important. For example, market validation can prove to be a challenging task. Launching a crowdfunding campaign sometimes protects the entrepreneurs from the risks while helping them learn important lessons from it.
The more the people are interested in a campaign and invest their money, the more popularity the idea gains. This is quite an easy way of validating an idea before actualizing it or giving up equity. The first question almost any angel funder or institutional investor will ask will often be about the proof of concept and the credibility of your idea.
This is where you can show them your successful crowdfunding campaign with the trust, encouragement, and backing from hundreds of thousands of people.
- An active crowdfunding campaign is a great way to spread the mission and vision of your business venture into the market. Most crowdfunding platforms have social media linked with them making it easy for you to share your campaign across platforms. This allows ventures to receive a huge number of organic visits from unique users and potential investors. In other words, crowdfunding platforms serve as a marketing tool for your business.
- It can be difficult for a new business venture with a limited set of hands and minds working to make sure everything is perfect. With the help of a crowdfunding campaign, you can now engage, collaborate and get early feedbacks and ideas from your investors. These feedbacks can be crucial from a customer’s point of view hence improving the building of the product by a notch.
- If your crowdfunding is successful, it means people who have invested in your campaign, believe in you and your product. This means you have already built a set of loyal customers for your business venture. Essentially, they are the early adopters of your project, who will help spread the initial word about your brand.
To conclude, we can say that crowdfunding is a brilliant way for an entrepreneur to not only get financing but an exposure that is very much needed for them to verify, execute and help their ventures grow.