Crowdfunding is becoming increasingly popular option for both investors and entrepreneurs. According to statistics, there are over 190 crowdfunding platforms in the US alone. The number of global crowdfunding platforms has gone up from $530 million as of 2009 to more than $2.8 billion in 2012.
Rob Towles CEO, who is one of the masterminds behind the first ever crowdfunding platform, believes that we are in an era of new ideas and rapid change and that only those in the right technology at the right time will influence and change the space forever.
Crowdfunding continues to grow rapidly and is already proving to be a successful alternative in acquiring and investing money. It’s no surprise that it is poised to be hot in 2018 and it is most likely not going anywhere anytime soon. Here is why.
1. Extremely Convenient
Every entrepreneur who has tried to ask for money or apply for a loan knows that this is one of the most nerve-racking experiences one can go through. With crowdfunding that is not the case.
Setting a crowdfunding campaign is easy as a breeze compared to all the preparation and paperwork required for loans. You just need to choose the right platform, prepare a video and a business plan, and make your presentation. Crowdfunding also offers a great opportunity for both entrepreneurs and investors to meet.
2. Validates Your Business Idea
As an entrepreneur, you may have a good business idea, but you can’t provide proof that this idea will make a profit. Crowdfunding enables you to study the market first to see if people are interested in your business idea and whether they are willing to invest in it. This way you validate your business concept.
3. Low Investment Risk
Both investors and entrepreneurs don’t have to worry about taking on a lot of risks since crowdfunding validates the market. Instead of investing in a business venture that lacks a sustainable market, you can test the water without putting much into the business. Even if your campaign wasn’t successful, the money that was given is returned to the donors.
4. Instant Feedback
In the course of your crowdfunding campaign, you are able to receive and review ideas and feedback from the start. This enables you to create surveys or polls that will help you know how people feel about your product hence you can make adjustments faster. This real-time feedback allows you to get your product to the market quickly.
5. An Effective Marketing Tool
Crowdfunding not only introduces your product or service into the market but also provides an opportunity to convey your goals and brand’s message to a large audience giving your campaign some traction.
Crowdfunding Investing Tips
- Vet the crowdfunding platform before selling your idea.
- Investors should do a background check of the business they intend to fund.
- Investors should also understand the business model.