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Author: USA

Crowdfunding: where do I start?

From the beginning of time, the most common way to start a business was to gather the necessary resources to get it up and running. Now with the development of technologies, there are more and more alternatives to get the financing for your project. 

You’ve probably heard of crowdfunding. This means collective financing and its operation is simple: you have an incredible business idea that you want to start developing, but you don’t have enough resources, so you upload your proposal to the crowdfunding platform explaining in detail what you plan to do and how much money you need to do it. 

Then, magic happens and all users who are interested can make a contribution, until the time you have to reach your goal is over. According to Forbes, the average campaign is $7,000 USD and those who reach 30% of their goal in the first week are more likely to raise the full amount. 

Clearly, crowdfunding has gained momentum in recent years, funding everything from green product brands to films and documentaries. And it has become a valuable contender in the race of business financing, competing with the most traditional platforms. 

Where do I start? 

Well, now that you have your project and want to start raising money you can ask yourself this question. First of all, you should analyze youporn and the different types of crowdfunding that exist, to choose the one that best suits your capabilities and resources. Surely one of these will make you feel identified: 

1. Debt crowdfunding 

 Its main feature is that, just like borrowing money or taking out a loan from the bank, you must pay it back. The best example is KIVA, an initiative commonly known for helping entrepreneurs in developing countries, but also available to users in the U.S. 

But don’t be discouraged, these types of platforms don’t consider the same factors as a bank when granting a loan, but rather focus on information about the industry you want to enter, how many years of experience you have and the level of risk you represent to investors. And according to the amount of funding you need, is the number of requirements you will have to meet. 

2. Equity crowdfunding 

 Another way to raise money is by giving investors equity in your business and filme xxx. There are different options for the capital someone will get in return for their investment, but stocks (with and without dividends) and convertible bonds are one option. 

The benefit is that you can set the terms of the percentage you’re willing to give up. Also, you don’t have to pay it back like a bank loan or debt crowdfunding. The only “downside” is that it’s a relatively new way of crowdfunding, so you may find it easier to get investors through another platform. 

3. Reward-based crowdfunding: 

 This is where the best-known platform comes from: Kickstarter. And the premise consists mainly on giving out rewards or special premiums to your contributors. You can give them free access to your product, invite them to visit your facilities, or anything that shows your appreciation, as well as other very attractive options that incentives them to invest more. 

Another benefit is that you receive help to promote your campaign. People who see something they believe in, are most likely to share it with their friends and through their social media, allowing you to reach out to more people.  

4. Donor crowdfunding: 

 If you are not prepared to give rewards or equity to your investors, you can turn to donors. At GoFundMe you can find the answer, since you don’t have to pay or give gifts for the funds you receive. 

The only negative part is that most users who use this type of crowdfunding do it for personal reasons such as illness or different problems they may face. Hence, donors will not necessarily be interested in giving money to a business through this channel. 

As we have mentioned before, each alternative will depend on your conditions and interests. Before you run to the first page you find, do some research and decide what’s best for you. In the end, the success of your campaign is going to fall mostly on the marketing power you put behind it, like a brunette at redtube. You should consider advertising in networking platforms, social media, videos, photos, blogs, email, among many others, because you never know where you will find the perfect investor. 

Everyone loves to hear a good story, so you can get creative and tell the reasons why you started the business, how the idea came to you and what you want to achieve with your project. The more ways you tell this story, the more chances you get for your potential donors to go running up your doorstep. 

The highest probability of achieving your goal will depend on your vision, but also on a perfectly prepared plan ready for success. Many developers fail because they believe they have a great idea, but they do not prepare for it. Even the most perfect idea fails if there is not a structure behind it. 

The main thing is that you have a good presentation and description of the project, with photos, plans or prototypes of the product, that you select the most attractive prizes exquisitely tailored for the public you are addressing. There is not much use in giving away mugs, if you want to be in the car industry. 

It is important that you know your audience and know how to make the product attractive to them, tell them why it is essential that the project is carried out as it will benefit them in some way and that finally, that reason convinces them to invest. 

Keep in mind that, if you are going to launch a crowdfunding campaign, do it when you already have the whole plan developed, you may even require the help of professionals in finance, design, photography, marketing, writing, etc. But invest time in having the best project you can present, to ensure the success of your campaign. Now there’s no excuse to start the business you’ve always dreamed of.

Benefits of supporting local communities with microfinancing

What is microfinancing? 

Micro financing is a broad term used for describing a diverse number of products of financial aid such as microloans, micro savings and micro insurance. It was originally conceived to take finance to people who do not have access to banks, have no credit history or collateral, or have no financial education and live in developing countries or in extreme poverty. 

The idea is simple: by giving a very small loan to someone living in a poor country, you could help them lift a small business that would eventually help their family move out of poverty. When that loan was paid, the money would be reintroduced to help another borrower, thus, getting more families out of their difficult situations. 

According to Plan International, “over 2 billion adults and 800 million young people worldwide do not have access to formal financial services and in sub-Saharan Africa less than 30% of women have an account with a financial institution”.

This concept was introduced by pioneer Muhammad Yunus, a Nobel-Prize winner, who thought it could help financially marginalized people, by providing them with the necessary capital to start a business and work toward getting themselves out of poverty. 

How does it work? 

Many people all over the world, live in a circle that does not always allow them to find resources to improve their living situations. They struggle to find work or have very low wages, they hardly ever finish basic education and find o other solution than to have children as another person represents another chance for income, but unfortunately most children that are born into those conditions, never brake the circle, and it is a story that repeats itself over and over again.

Microcredit institutions provide the resource, such as the loan, as well as products like savings accounts with no minimum balance and insurance, at a much lower rate with lesser premiums. With these opportunities, small families have a way of breaking the never-ending cycle, even when they don’t use them to run a business. Only by having more options, like not needing any more children or the chance to send them to school instead of work, they already perceive a greater benefit than before they got the loan. 

What are its benefits? 

People are also most likely to pay because they are grateful to be given an opportunity they normally wouldn’t have gotten. Microfinancing has the highest payment rates, since people rely on the small amounts of money they are lent to, and paying it back allows them to get another loan and so forth. 

Another benefit is that most of the time, taking out a micro loan requires the person to receive training, with courses that span from book-keeping to cash flow management. Eventually, this education intends to help people not only repay the loan, but to maintain a healthy business through a long period of time. With expert business training and planning, more start-ups can avoid costly mistakes and are more likely to be successful in repaying their microloans and building a solid credit history in the process.

How has the concept of Microfinancing evolved? 

 Yunus thought that people would use their money to start a business, however, evidence nowadays shows that often, borrowers use the loan to meet their day to day needs. In case of an emergency, to put food on the table, and even pay for their children’s education. 

Then, microfinancing appeared to be the solution to ending poverty around the world. But has it really been as successful as economists thought it would be? 

From its original conception to our current date, the conception of Microfinancing has completely changed. Although it has occupied researchers minds over the past decade, the findings have not supported the first hope for microcredit, as it has not created real evidence that it lifts families out of poverty. Then, how come it is still not viewed as a failure in economic history?

Financial diaries of people living on $2 or less per day have shown that microcredit helps many families deal with emergencies, make critical purchases that they couldn’t otherwise afford, and put food on the table in times of scarcity.

In the end, Microfinance became a key strategy to expand options for poor people by offering more reliable financial services. It is a way for families to build or rebuild a credit history, to become financially independent, resilient and more able to provide for this families in times of scarcity or need. 

And it has proven to be helpful not only in small communities or Third World countries, but also with small entrepreneurs all over the world in any economic situation. Microfinancing supports the talent of students, young businesspeople, retired people, immigrants, women, among others who would normally struggle to get lines of credit or loans from traditional banks, as well as investments or funding for any size of project. 

This is the way many unexperienced filmmakers, artists, chefs, etc. are financing their projects. And the same rules apply for these kinds of microloans, as people feel grateful to be given the chance and to be able to continue funding their business ventures, they rarely fail paying the money back. 

The history of microfinancing is fascinating, as it presents an unexpected lesson that applies to many things in life: bringing more opportunities to people helps them become more ingenious, cunning and better equipped to deal with the difficulties they may be presented with. Rather than not trusting people, or by giving them things for free, we should be working on creating more initiatives to give people the right tools and teach them to make the most out of what they can get. 

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