What does crowdfunding mean and what does it do?
Crowdfunding, in its simplest
What makes Crowdfunding different?
It is completely different from the conventional ways of raising capital for a project. Generally, before getting investors onboard we need a solid business plan in place. Most of the time it requires an extensive amount of research. Some investors even want to see a prototype to decide,
How does it benefit us?
Compared to the old traditional ways crowdfunding offers more benefits now.
It places us in a network consisting of thousands of recognized and approved investors that we can talk to, discuss and share the complete vision behind our crowdfunding campaign.
We get to see a clearer picture of the pros and cons of our project in the process of starting our crowdfunding campaign. In order to create a successful
Publicity & Hype
There is no such thing as bad publicity. In this type of
On a crowdfunding platform thousands of potential investors will evaluate our idea helping us to fine tune it and have it fully accepted before we give ourselves a go ahead. The investors to show interest in our campaign will ask questions about our project that will help us know if anything is missing or could be worked upon. Once we are done with adding those missing parts of the puzzle our campaign will automatically become more attractive and more rewarding.
The best element of a crowdfunding platform is that it consolidates all our money generating efforts under our profile and connects us in real time with all those involved with us in our campaign. This allows us more time (for our project) as its helps us reach everyone at once for updates, and saves us the hassle of contacting them all separately.
How many types of crowdfunding are there?
All projects require a certain amount of investment in their different stages of their growth. Crowd funding also comes in 4 different types, depending on the project and its growth objectives. The 4 types that are very different but all come under the umbrella of crowdfunding are reward based, donation based, equity based and debt based.
Crowdfunding based on ‘Rewards’
In ‘Reward’ based crowdfunding ‘Backers’ can contribute anything between $1 to &1000 or sometimes more in exchange for small rewards. It could simply be what is being produced, such as a Bluetooth speaker, a copy of our film or music album, etc.
There are many platforms for ‘Reward’ based crowdfunding but the most accepted ones are Indiegogo & Kickstarter.
Crowdfunding based on ‘Donations’
Just like it sounds in donation based crowdfunding ‘Donors’ are generally reward only through appreciation or gratitude shown by the project creator or beneficiary. These donations again range between $1 to &1000 and sometimes even more. The ‘Donors’ may also get a tax deduction and sometimes even a small souvenir.
Crowdfunding based on ‘Equity’
Crowdfunding based on ‘Debt’
Debt based funding is essential to refinance a credit card. For consolidating debt, to renovating our home or buying or fixing our car.
Now a summary for the types of crowdfunding available: –
Reward based crowdfunding: In exchange for a reward ‘Backers’ pay us a small amount.
Equity based crowdfunding: In exchange for a small number of shares in business ‘Investors’ put in large amounts of money.
Debt based crowdfunding: In exchange for some interest on top of the principal amount the ‘Lenders’ give out loans.
Crowdfunding has a long history with many origins. It is