Crowdfunding Fundamentals and Why it's Great for Business Growth

Crowdfunding Fundamentals and Why it's Great for Business Growth

16 Oct 2019

Crowdfunding Fundamentals And Why It's Great For Business Growth

Thanks to the internet, it's no longer necessary to pitch your business ideas and new products to intimidating investors. With the rise of crowdfunding, you can easily showcase your project to the masses and raise the required capital.
But what exactly is crowdfunding? Is it beneficial for businesses looking to grow?

The Fundamentals
Crowdfunding is the process of gathering funding for a venture by collecting small amounts of money from a large number of people. This is done online through social media or on a dedicated crowdfunding platform such as Kickstarter, Indiegogo or Fundable.
It's basically alternative finance. Raising the capital is a collective effort; friends, family, customers and individual investors can all contribute.

There are Three Types of Crowdfunding:
- Equity Crowdfunding: contributors receive shares in your business in exchange for the capital they give

- Debt Crowdfunding: also known as peer-to-peer lending. Businesses borrow money from investors and pay it back over time (with interest)

- Reward Crowdfunding: contributors give money without receiving a reward, or perhaps in exchange for a free gift

Why Crowdfunding is Beneficial for Your Business
Because the campaign is online, you benefit from greater exposure. Even if a person can't contribute, they can share your campaign to others. And since you don't have to prepare a physical sales pitch or visit investors, it saves you time and effort.

Imagine you have an amazing idea for a revolutionary new product. Wouldn't you rather crowdfund it and reach thousands of potential investors than pitch to just a handful who'll possibly turn you away?

If your crowdfunding efforts come to fruition and your project or product gets off the ground, your business has a chance to grow. You'll become innovators in your sector without the hassle of making multiple sales pitches.


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