What is Crowdfunding?:
I would say crowdfunding is a different version of angel investing. Typically, the quick funding source for any businessman is to borrow money from family and friends, if the need is significant eventually borrowing from more number of friends and known people. Similarly, crowdfunding is raising fund from more number of known/unknown people over the internet.
How to convince unknown crowd:
Eventually, can we knock strange people’s doors for funds? 🙂 :). Of course, we have a powerful weapon internet; many companies created a collaborative platform for investors and fund seekers. How does it work? How do you introduce yourself on a commercial reason to strangers, two options 1. Getting introduced by common friends 2. Introduce and market yourself and venture :). Having common friends across the globe may not be possible so showcase your venture over the platforms and get funded.
Types of Crowdfunding:
Crowd funding is majorly into three categories, which type you are going to select based on the product or service you offer.
Debt based Crowdfunding:
Crowdfunding which doesn’t give any returns to the investor. Donation-based crowdfunding uses for disaster relief, charitable activities, and charities.
Loan based Crowdfunding:
Investors plan to get money back on the investments with interest. It almost works as traditional banks, based on the amount of money, duration, product and the performance, both the parties can mutually be agreed up the returns on investment (ROI).
This is pretty straightforward, some amount of stake has to be diluted to the investor, it could be small or big shares based on the venture, performance, and investment.
Diluting stake to a right person makes you enjoyable and a wrong person makes you miserable
by Narasimha Mohan
Why Crowdfunding is difficult:
Convincing one guy itself is a nightmare to get funded, for instance, you may have to convince around ten individuals to raise a 1M dollar, imagine the practical problems, you need to invest a lot of time and efforts. The majority of the people don’t opt crowd funding for these reasons.
Crowdfunding is not a bad idea. Apparently, it is so powerful and very good in a long way for the entrepreneurs, it all depends on the size and urgency of the fund.
Few crowd funding platforms:
All the best, get funded 🙂