UNDERSTANDING 'CROWD-FUNDING' AND ITS BENEFITS FOR YOUR NEW BUISNESS
Posted 16 SEP 2016 / 0 Comments
When it comes to establishing a business, the first and major challenge would be to come up with sufficient funding. Whether it is for a start-up or for an established enterprise, raising the needed capital is a challenging first step. There can be many ways to access appropriate funding for a particular business. The best and perhaps the most practical of all is the so called "crowd funding"
What is crowd-funding?
Crowd-funding is a term used that refers to the strategic funding of a particular business through collections or contributions from a large number of prospects. The volume of the contributors simply offsets the need for bigger collections from each sponsor. Technically speaking, the practice of raising money from two or more individuals is categorized as crowd-funding. Apart from business or investment purposes, crowd-funding is also utilized for a common experience, product, cause, and service.
As our course of life shifts dramatically towards the worldwide web, crowd-funding has become much easier to practice through the aid of various social media platforms like Facebook, Twitter, Google Plus, LinkedIn, and many more others. The practice can revolve around the circles of family, friends, and professional acquaintances. Basically, there are three types of crowd-funding – donation, debt, and equity. In donation, donors pool in their resources simply because they believe in the idea of the business and that they expect nothing in return. On the other hand, contributors who are also referred to as investors prior to the business are able to get their money back plus interest. Lastly, equity crowd-funding allows investors to invest in the business in exchange for an appropriate size of share or stake.
The benefits of crowd-funding
Often the startup owner is perplexed about what they need to begin their business venture. Ideas, gumption, persistence and capital are just a few of the successful traits of the entrepreneur . While raising capital is a difficult feat for many to overcome, crowd-funding offers entrepreneurs an easier way to meet their passionate expectations of business ownership and success. Crowd-funding allows entrepreneurs to easily acquire sufficient monetary resources without the major drawbacks that are present in traditional business fundraising techniques. Listed below are some of the benefits and advantages entrepreneurs can expect from crowd-funding:
Exposure – While conducting your crowd-funding campaign you are already exposing your business to diverse audience that may serve as potential market in the future. As discussed earlier, crowd-funding campaign is mostly initiated in various social media platforms like Facebook and Twitter that can connect you to a very wide network of friends and relatives as well as academic, social, and professional acquaintances. In short, you are publicizing your offered products or services in advances as you are generating funds to effectively jumpstart your new business venture. However, here at Synergy Strategists, we have an expert PhD’d research team to assist in raising the right funds from the right investors and for the right target market. Synergy has even partnered with Fundable.com to offer additional services to our clientele.
Simplicity and effectiveness – Crowd-funding offers a much more simplified process compared to its traditional counterparts. Less time, effort, and money is needed to make the campaign a successful one and this can help motivate entrepreneurs to focus on more important issues such as the business itself.
More investors/contributors are drawn in – As the name of the technique implies, crowd-funding allows a great number or volume of donors/investors/contributors for smaller donations/contributions each. With smaller contributions, it will be much easier for investors to agree and support your campaign effectively raising the chances of absolute success.
Market validation – With donors agreeing and supporting your campaign, you are able to gain market validation for your business in its earliest phase. And this will serve as a very fine addition to your company portfolio that can effectively attract bigger investors in the future. Even today, a lot of businesses still have a hard time acquiring market validation. But through crowd-funding, proof of concept is an easy and effortless reach.
Patch-up holes – For most entrepreneurs, perhaps the most challenging task is starting-up a business and not every concept is perfect in the first run. Through crowd-funding, an entrepreneur is able to open an effective channel between him and the public for comments, feedbacks, and constructive criticism which are critical in covering every hole. Through this channel, entrepreneurs are able to acquire new ideas that were unrealized before.
With the aforementioned benefits available to interested business’, crowd-funding is an essential element in getting enough monetary resources to materialize a business concept. It also offers advantages that can prove beneficial to your business’ operation in the long run. Synergy Strategists offers long term consulting on all crowd funding packages through their site to ensure the proper campaign is implemented, and appropriate funding is promulgated.