Benefits of Crowdfunding

Crowdfunding.

You’ve probably heard of it, but do you know what it is? Maybe you’ve heard of KickStarter, or GoFundMe, and obviously, Kid Everest, but do you know what these websites do? Let’s start with the basics.

Crowdfunding is the process of raising capital in small increments from a variety of investors. It is an alternative way of raising seed money for a business.
Most crowdfunding platforms require the following steps: 1. have a business idea, 2. have a goal, 3. start a campaign, 4. receive the funds you need to start your business. There are so many benefits for crowdfunding when you are just starting out.

The Benefits

1. Gain visibility!
Crowdfunding platforms double as a marketing and media platform for your budding business. They help you gain exposure to a variety of investors and supporters and may even help your campaign by sharing it on their social media. It’s like free marketing!
2. Builds validation!
This free marketing will help your campaign gain quick traction, social proof and validation. Social proof and validation go hand in hand. Social proof is where your business begins to organically gain followers as more and more people becomes interested in your business. This social proof builds validation for you that your business concept or idea is one worth pursuing. When your business receives attention from many potential investors and supporters your social proof and validation in your product will continue to grow.
3. More efficient!
Crowdfunding is more efficient than traditional funding. Once you have built social proof and validation, your growing list of followers will be happy to help see your business succeed. In this respect, you can quickly raise the revenue you need for your business without having to beg a financial institution.
4. It’s free!
Crowdfunding platforms are purportedly free to use. That means you will not have to play anything to create an account and start a campaign. That being said, these platforms do need to make money, and will most likely take fees from your total donations. Do not be alarmed and make sure to check out the fees page before starting a campaign.
5. No debt!
One of the biggest advantages of crowdfunding is that you do not go into debt. Many new businesses begin with a trip to a bank or credit union to beg for a loan. They may or may not believe in your business and this may be the deciding factor in whether or not you receive funds. But even in the case where you receive a loan, your business is already set backwards due to the overbearing nature of owing a bank money.

In crowdfunding, the bank is cut out. Followers, supporters, and investors want you to succeed, so they help fund your start up in small increments. These investments are typically a donation or rewards-based funding. In either case, your investors are investing in you and your story so make sure you have a good one!

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