Waiting for the right time to start your own business or have a next multi-million dollar business idea. Crowdfunding empowers you to be an entrepreneur by helping you bring entire business and better thingamajigs to life overnight.
So what is crowdfunding? Is it different from crowdsourcing, more importantly, how can you use it to provide venture capital for any startup?
What Is Crowdfunding?
Crowdfunding is a popular concept that emerged in the US and the UK. As of now, it has become an emerging way of raising capital entailing the use of social media networks – Facebook, Twitter, LinkedIn and some dedicated websites. The modern business environment considers crowdfunding as a way of connecting investors with the modest business startups and projects, using an online transaction portal that eliminates all the possible barriers to entry.
Simply stating, it is a general process of asking people for donations, which is then used as the capital by startups. As crowdfunding involves pitching ideas directly to the internet users, offering financial banking, entrepreneur and small business owners can leverage it as an option to bypass venture capitalists and angel investors. Eventually, it also provides you, a unique opportunity to validate the concept and scope of a project in the targeted markets.
There are ample resources like Kickstarter and Indiegogo available on the ‘World Wide Web’, allowing entrepreneurs and startups to initiate their crowdfunding ventures. Remember, using these platforms is easy at the same time needs creativity. Build web pages hosting information, promotional videos and images of the products or services for which you need funding. Ensure that the pages you create are catchy, explanatory and engaging for the audience.
It is a better practice to offer special rewards in return to the viewers or funders pledging support to your venture. Ordinarily, the rewards must vary depending on the amount of funding received. As of now, startups and entrepreneurs offer equity or profit share to investors and offer subtle benefits equating exclusive merchandise, advance access to new releases, or personal incentives to normal funders/donators.
Crowdfunding Scenario In India
India undeniably is emerging as the most promising economy in the world. It hosts a population over 1.2 Bn, with the dramatically rising middle-class segment. It would not be wrong to say that the power of capital formation necessary for crowdfunding lies in the hands of this rapidly increasing middle-class Indians. Presently, equity crowdfunding has not been a popular model in India. Nevertheless, anticipation cannot be denied that in the near future, it will hit the Indian market with equal optimism.