How crowdfunding helps startups

“Success is best when shared” – Properly quoted by Howard Schultz (President of Starbucks). We often hear people thanking someone else for success, whether it’s their parents, mentors, or spouse. Have you ever heard of someone thanking the crowd for their success?

Even if you are thinking of starting your own business, the first thing that comes to mind is financing. Personal savings, loans from friends, family and bank loans are the most popular ways to finance a business start-up and, with a detailed business plan, an entrepreneur could turn to venture capital companies or Angel Investors to get financing. With the change of era and technology, we now have an alternative source of funding for startups, which is crowdfunding.

For those unfamiliar with the concept, crowdfunding is an alternative way to raise funds for a large number of people through the Internet. All you have to do is prepare a campaign and post it on a crowdfunding website and make it viral with the help of social media. People who really care about your project and find interest in it will contribute. In return, they will get a reward or equity, as the case may be.

Because there are several types of crowdfunding, two of them are best suited for startups:

1. Reward-based crowdfunding: In this type of crowdfunding, the sponsor gets a reward in return for their contribution. This reward can be a handwritten thank you note or the personalized product itself. It represents the gratitude of the project owner to the sponsor, these are things that money cannot buy and they give a special feeling to the sponsor.

2. Equity-based crowdfunding: Here, people who contribute to your campaign will receive the company’s stake or shares in return.

With this unconventional fundraising technique, employers ’financial problems diminish. Now they don’t have to knock on investors ’doors, throwing them in and convincing them to the end. You don’t have to be frantic and make presentations to numerous people. All you have to do is present your business online.

Crowdfunding allows entrepreneurs to present their idea to a wider audience rather than specific investors. With social media prevailing so much today, it’s much easier to find people with like-minded ideas who contribute to your project. Everyone can contribute to your idea; just make sure people know about your project.

So, if you have an idea that is not funded, get ready to make it live. Get crowdfunding