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Economics

Crowdfunding: where do I start?

USA

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.

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