Start-ups or new business ventures often look for ways to source funds or raise capital. Access to traditional funding methods like angel investments and venture capital is limited and many a times, not feasible or available for all start-ups. Here, crowdfunding or crowd financing may be a viable alternative. According to Investopedia, “Crowdfunding is the use of small amounts of capital from a large number of individuals to finance a new business venture. Crowdfunding makes use of the easy accessibility of vast networks of friends, family and colleagues through social media websites like Facebook, Twitter and LinkedIn to get the word out about a new business and attract investors. Crowdfunding has the potential to increase entrepreneurship by expanding the pool of investors from whom funds can be raised beyond the traditional circle of owners, relatives and venture capitalists.” Crowdfunding has gained popularity in the last few years, especially in the United States of America and the growth of online networking has contributed towards it. Crowdfunding is exciting and helps turn great ideas into fruitful campaigns and enterprises. It is an opportunity for passionate entrepreneurs to present their ideas on an open platform and receive support and feedback from equally passionate people across the world. Here are a few basics about crowdfunding that you need to know, before jumping on this: Is it right for you? If you are looking to raise a small amount and are confident of your plan hitting the right cord with the public, then crowdfunding is appropriate for you. If you have a complicated concept or an idea that caters to a niche audience, then crowdfunding might not work for you. The idea needs to be relevant, compelling and inspiring for the audience to invest in. Where to pitch your idea? Many online and offline platforms are available to showcase your ideas and projects. Crowdfunding websites allow you to create your campaign and also help with timely advice and tips on achieving your target. Some crowdfunding websites allow you to publish your campaign free of cost but charge you some percentage as commission on completion of your target. Offline platforms are event driven and limited to the locality or city. Pros and Cons Besides being a sound alternative to conventional forms of funding, crowdfunding is helpful in spreading large-scale awareness about your business. It creates a strong network of support for your business through the investors and helps establish more contacts. Success through crowdfunding ensures greater interest from other investors and paves way for more funds. Being an open platform, there is a high risk of your idea or concept being stolen and replicated elsewhere. It is important that you copyright your idea before showcasing on such platforms.
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