Crowdfunding- what is it?
What is crowdfunding?
It is a process by which people give a small amount of money to collect a large amount of money usually for a cause. It is kind of an alternative finance and crowdsourcing. There are several kinds of crowdfunding, the internet being the main. It consists of 3 parties- the party that will be getting the money, the party that will be arranging the crowdfunding by providing a platform and the people who will be contributing for the cause. Crowdfunding is done for several causes including travelling, entrepreneurial ventures, medical reasons and others. Crowdfunding is a very important way of collecting money.
Why is crowdfunding important and how long has it been around?
Crowdfunding is essential in places like India because most people are below the poverty line and can’t pay their medical or other bills. Crowdfunding in its raw form has been around for quite some time. Fundraisers, crowdfunding in India have known to collect money from the people by showing their medical bills for quite some time. However, doing it with the help of internet increases its legitimacy and makes everything happen in a more organised way. Fundraising is here to stay.
Crowdfunding can also be essential if you are trying to start a business because crowdfunding can also increase the customer base and make more people aware of the initiative. One must make sure how he is executing his campaign thoroughly because a poorly executed campaign won’t garner a lot of attention. Crowdfunding is very important for most people these days. Even though it has been around for a long time, its significance is increasing with each passing day. Fundraising has never been easier. There have been several crowdfunding platforms in India as well.
Crowdfunding is essentially the opposite of the mainstream approach to business finance. Traditionally, if one wants to raise capital to start a business or launch a new product, one would need to pack up their business plan, market research, and prototypes, and then shop their idea around to a limited pool or wealthy individuals or institutions. These funding sources includes banks, angel investors, and venture capital firms, really limiting one’s options to a few key players. One can think of this fundraising approach as a funnel, with them and their pitch at the wide end and their audience of investors at the closed end. Fail to point that funnel at the right investor or firm at the right time, and it’s a loss of money and time. Motivation for participation of donors comes with the storytelling capacity of the creators of the campaign. The more number of people you will keep in the loop, the more effective the campaign will be. The other people, including your friends or family, can run your campaign for you when you are not around. Crowdfunding is dependant vastly on the exposure it gets. Hence, sharing the campaign widely is very important as well which can only happen if there are a lot of people who are sharing your posts on social media and otherwise. These people can also tell other people about your cause who will in turn inform others. This is very important as this might attract people who feel strongly for your cause and donate generously. So keeping people informed is very important.
These are the baby steps to crowdfunding. Crowdfunding is an extremely important these days. There are effective to make ones campaign a success. One just has to be careful with it. Crowdfunding presents an exciting opportunity for budding entrepreneurs and business owners to obtain funding to help them turn their amazing ideas into brilliant businesses. Whether or not one will succeed at a campaign or not is totally dependent on their contacts, public relations and their goal setting. So go out there and make your campaign a success.
