Crowdfunding is now one of the most popular funding options adopted by entrepreneurs. It is no surprise, since this fairly new strategy provides multiple benefits to startup owners.
Before now, bank loans, small business grants and venture capital funding were the most popular business financing options. Although, these options are still available, they are no longer widely adopted as before. More and more people are now funding their businesses through crowdfunding, instead.
Crowdfunding simply involves pooling together investments from a large number or groups of people, usually via the Internet, to fund a business. In return, investors get some merchandise, goods, or nothing, if the investment has been a donation.
One reason why crowdfunding is becoming more popular is the ease of implementing it. All it takes is for the business owner to launch his or her funding campaign any of the reputable online crowdfunding platforms such as Kickstarter, Indiegogo, Crowdcube, Seedrs, and FundingCircle.
Aside providing access to capital, crowdfunding provides a number of other benefits to entrepreneurs. Firstly, it hedges risk by helping them avoid giving up equity before getting their business off the ground. Secondly, crowdfunding serves as a marketing strategy because investors help to share word of the business they are supporting financially.
In addition, it provides wider coverage for the funded business, and this will create brand awareness and generate more eyes on the campaign.
Other benefits of crowdfunding include the zero cost of launching a campaign, the opportunity of pre-selling, and the attraction of potential customers and investors.
If done properly, crowdfunding is a good strategy worth considering for entrepreneurs who deem traditional funding options too risky or difficult.