Crowdfunding is a practice that is adopted for raising funds to run small projects or ventures by accumulating a small sum of money from huge sources. It can also be called the financing’s alternative source for the Lead Generation Company as it is considered as the contemporary method for raising finance.
Here are the top 5 ways for the young entrepreneurs to increase money by crowdfunding –
1. Investor Education – Crowdfunding acted like the business fundraising’s Wild West. Various projects that far exceeded or met their capital targets vanished with nothing but little that the platforms of users could do about the same. While the Crowdfunding websites were still capable of collecting their shares by fees, casual investors and users in the projects had hardly any service or product to display for their ad, and in a lot of situations, they were lacking the initial investments as well.
The startups’ new wave has regarding the issue through conducting an individual investigation into those projects which exceed what the casual investor would be capable of finding on a business’s website or the fundraising site. Through acting as a kind of rating agencies, the new startups are assisting both investors who are into funding the promising project or casual tech fanatics interested in innovation in deciding those projects that can deliver on their assurances. Always remember that the total money raised for every crowdfunding campaign increases every year on a worldwide level.
2. Equity Crowdfunding – It is mostly similar to conventional fundraising for startups where you will trade the stock for the incoming capital. For a long time, Crowdfunding platforms have relied on the reward-based systems for incentivizing backers for the projects. While it works well for those projects which can directly return the service or product to customers, this platform is inappropriate for those startups which serve the niche segment. Please note that entrepreneurship and business accounted for almost half of the total amount of raised money while the real estate crowdfunding continued to elevate in popularity.
These kinds of platforms perform crowdfunding as well as startup investment possibilities for investors. Incentivization is rapidly growing as the latest crowdfunding trend which allows the entrepreneurs for raising capital through equity instead of the physical award, permitting for a multitude of businesses to be capable of now effectively using crowdfunding for getting their ideas off the ground.
3. Non-Profit Crowdfunding Campaigns – These campaigns are gaining significance as the charitable organizations pick the short-term, particular project to get money for the events. A lot of crowdfunding platforms might be set up by these organizations or they incorporate tools for peer-to-peer fundraising. This will make the supporters capable of setting up their pages for the campaign.
Although crowdfunding has conventionally been the individual investment, now the regulations are changing rapidly. In recent times, more and more businesses, organizations, schools, teams, as well as other groups have been proactively working towards a democratized model for crowdfunding. With several famous crowdfunding sites especially targeted towards the non-profits, the charitable firms are looking for better ways so that they can cater to their goals for fundraising by crowdfunding.
4. Blockchain Technology - Young entrepreneurs know how to make the most of emerging crowdfunding platforms like Blockchain technology and AI (Artificial Intelligence) which have gained importance in the wellness sector. By simply clicking the button, people are capable of sharing their stories, as well as the challenges and difficulties they encountered during emergencies while hoping to give financial support by public contributions.
Blockchain apps have gone way beyond the cryptocurrencies for the news outlets as well as have created absolute hype in the investing communities. Although initially recognized as the way of democratizing fundraising to make anyone freely pursue creativity, these platforms were identified as less promising. Lack of simplicity about exclusionary policies and excessive charges made a lot of platforms inefficient or inaccessible for entrepreneurs.
Young entrepreneurs have realized that as online crowdfunding comes without any debts, it is the most favorable solution for a lot of patients. Many new startups are applying the decentralized ledger technology to the crowdfunding scenarios. Some of them have already started the token system that permits users on the platform’s both sides for crowdfunding free of fees. As this technology is continuously developing and manifesting itself into the industry of fundraising, Blockchain will turn out to be a game-changer for this year’s crowdfunding economy.
5. Crowdfunding in the real-estate sector – Crowdfunding for the development of real estate differs a lot from other kinds in terms of benefits, risks, and investing for investors. In crowdfunding for real estate, investors portray the role of the property shareholders or they allocate the funds in those loans that are backed by it i.e., debt investments, unlike the other industries.
Till a couple of years ago, the real estate development was majorly through investing money directly by Real Estate Investment Trusts (REITs). In turn, real estate investment trusts gave investors and the sector of Young entrepreneurship a golden chance to purchase stakes in the real estate facilities. But, this took place to hugely considerably limit access to the projects for the individual investors. In the real estate industry, crowdfunding has improved by giving the green-light to investors across the world for taking active participation in real estate investing through several online platforms.
Why is crowdfunding a better option for the Young entrepreneurship than other fundraising channels?
Funding is a significant ingredient for any startup, and the platform of crowdfunding is emerging out to be famous as it is being viewed as a major validation for the service or product. This is also more democratic and trendy as compared to the other routes for the latest startups. While crowdfunding is usually promoted as a fast and easy way for raising plenty of dollars, without loads of responsibility, it can need plenty of investment and work.
It can be highly beneficial and profitable. You only have to ensure the fact that you have done the research and are well-aware of the charges, as well as which channels are your best match before diving in. Crowdfunding displays an option, hassle-free and less complicated, to receive funds for the company. This is the major reason why it is regarded as one of the best Young entrepreneurs ideas and a lot of startups are taking its help.
- In case you are managing the early-stage firm where you should concentrate more on increasing its popularity and bringing the seed capital in the venture or project. Rather than completing the loan demands or attempting to locate verified investors all by yourself, you can reach out to potential funders by the centralized location. This can take place by starting the fundraising campaign at a suitable platform.
- If you handle an effective, noticeable fundraising campaign, you will be capable of getting social validation or proof.
- When you start the crowdfunding campaign, you get yourself admitted for the review as well as prospective backers interfere into your company plan and ask the difficult questions. It is an appreciative brainstorming session that makes you capable of improving the business idea.
- There is a reason why crowdfunding comes under the category of the most effective Young entrepreneurs ideas because it offers media exposure which makes it achievable for more people to view the fundraising drive. In turn, this creates the everlasting identification of the startup brand among prospective investors and customers.
Therefore, to make Crowdfunding act as robust support to Startups , it is inevitable for having the investment procedure regulated. For the same, the need for appropriate regulatory norms is vital that would guarantee safety for investors and seamless fundraising procedures for entrepreneurs as well. Needless to say, Crowdfunding has emerged as a new successful platform for entrepreneurs so that they can raise money for investment purposes.
About the Contributing Author
Apeksha Goswami is a Digital Marketing Executive at Leadabode. Her focus is on creating a well-knit digital link between the audience and the company which helps develop a sturdy relationship and drive new traffic towards the clients. She believes in herself a little more and also loves to express her thoughts to the world on Instagram.