What is crowdfunding? Everything related to crowdfunding explained
Crowdfunding is the most heard term when you have a startup or you get updated from startup news. You might have seen many advertisements regarding crowdfunding and also websites related to crowdfunding. If you have a startup, in that case even you hear to list your startup for crowdfunding. But what is basically crowdfunding?
What is crowdfunding
Crowdfunding is basically used to generated funds for the business from other people. This is the method by which a small number of funds are raised from a large number of investors. This involves a large number of people giving small amounts of funds to the startup to create a small fund for the venture.
Breaking down crowdfunding
Crowdfunding existed from long back ago. But a few years back, only a few investors are allowed to participate in crowdfunding. Crowdfunding is governed by legal laws and restrictions. It had restricted only a few people to participate.
This restriction is that only a few people with more than $1 million net worth are allowed to participate. This restriction is to save small investors to save their funds being invested in the business because most of the businesses fail.
but thanks to the latest encouragement to the startup and business. Now everyone can participate in crowdfunding though the law is still in review and new restrictions are reviewed even now and then.
who will invest in crowdfunding
Who will participate in crowdfunding? when you list your business what kind of people will invest in your business. People from all around and people who come to visit your campaign on the crowdfunding website will invest in your startup
People who are successful business and philanthropists and who wanted to encourage startups and ventures will invest a small amount in your campaign.
And few people will invest in your campaign for getting the rewards that you provide for the investors of your venture. If you give good rewards people will invest to get the rewards that you provide.
Getting funded in crowdfunding is not that easy. Check own guide to know how to set up a successful crowdfunding campaign
What for investors.
As we said why people should invest in your startup or venture. There are few things that make people invest in your venture.
If you provide good rewards like a premium membership on your website for a specific time if they invest a specific amount. A product or service from your venture for the investors and some more rewards like goodies from the company and many. All these will encourage normal investors to invest in your startup.
Providing good rewards to the people who are investing in your startup will encourage people to invest. And also make rewards high for high investments, which forces users to invest more in your venture.
In order to make people know that your venture is accepting crowdfunding and is providing rewards for the investors. You need a platform. A platform where there are many visitors who visit to know about new ventures to invest.
Selecting a proper platform is an important step and this will affect the amount you are going to raise. Select the best platform. Below are a few platforms
and many more
Factors affecting successful crowdfunding campaign
- Ask friends and family relatives to give a boost to the campaign by donating small amounts
- Give cool rewards and perks
- Mention clearly the achievements that your venture had received and given the feeling to the investors that they are part of achievements
- Always keep the investors updated with the latest info about your venture