If you’re planning to start a business any time soon, you will have no doubt considered crowdfunding. So what is crowdfunding and why is it essential for your startup? Crowdfunding is essentially a way to source your funds or collect donations from a large number of people through crowdfunding platforms such as Kickstarter and Indiegogo.
There are some risks associated with crowdfunding as your idea gets exposed to the marketplace much earlier than you would probably want, but the advantages by far outweigh the disadvantages. Let’s discuss how it benefits your startup and why you need to take it very seriously indeed.
Combining the best of crowdsourcing and microfinance, it brings together various individuals who commit money to projects and companies they want to support. It’s a young and quickly growing market but one that is transforming how people behave with their money. It’s also transforming the ways businesses raise capital.
Massolution’s Global Crowdfunding Report expects to become a $300 billion industry in just a few years. But in many ways, crowdfunding is just getting started — the same consulting firms expect the industry to grow at a compound annual growth rate of 100% over the near term.
Crowdfunding Gives Traction to Your Startup
Here’s what your startup needs most – visibility, momentum, traction, or whatever you choose to call it. There has to be a certain buzz about your startup, people should talk about your product offerings. There should be a large number of people willing to throw big bucks on you. Now, the only way to make this possible if there is a lot of advance publicity given to your startup. The easiest way to gain this advance publicity, momentum or traction, is by starting a much hyped, very visible campaign. People love stories and they might like the story of your startup as well.
Crowdfunding Generates Trust in Your Startup
Ultimately, business is all about trust. If you’re to find investor, find business partner or find angel investor, you must project trustworthiness. Your startup should come across as reliable and credible, and there should be certain authoritativeness about your story. You should come across as an expert in your niche, whatever it is, and project your capacity to make a huge difference to people’s lives, solve problems or address a need with your products and solutions. The best way to do that is by starting a campaign, as it virtually opens up your startup for inspection by millions of people around the world. There is nothing left hidden. And this creates trust in your business.
Crowdfunding Gives Your Startup Valuable Media Exposure
The media loves a story! Haven’t we all heard of the young high school dropout who raised $100,000 on Kickstarter to finance his super successful iPhone app? Or the retired school teacher who raised $1 million for impoverished kids in the Democratic Republic of Congo? The media simply laps it up! A successful campaign will get you positive coverage in the media and much needed advance publicity. It’s all the advertising your startup needs and it costs nothing!
Crowdfunding Helps with Your Marketing
Crowdfunding helps your startup raise money, we all know that. What it also does is to create a loyal base of committed customers who show great interest in your products or solutions. This creates interest in your business, in your products and services. Crowdfunding platforms enable you to use highly innovative technologies and marketing tools to run your promotional campaigns and programs. These are just some of the ways how crowdfunding gives your startup all the support it needs.