In this article, you will learn everything you need to know about Crowdfunding and why it is an incredibly useful tool for entrepreneurs.
The first step to building a business is to have an idea. Which will be the first brick that will sustain everything that comes after.
The next step, according to your business idea, is to raise funds… and that is where most of them get stuck.
Fortunately, there are alternatives to obtain the necessary resources. As the crowdfunding or more commonly called in Englishcrowdfunding.
What is crowdfunding?
Crowdfunding is a financing model in which there are 3 parties involved:
- The project to found.
- people who contribute money.
- an intermediary who facilitates the transaction.
This strategy used by many entrepreneurs worldwide, has had incredible growth.
In 2013 he raised a total of 6.1 billion dollars. In 2014 more than 16 trillion dollars. And by 2015 more than 35 trillion dollars. This shows that it is positioned as one of the most desired alternatives to promote startups.
How crowdfunding works.
The process is simple. A person or company posts a video explaining their idea and a detailed description of what it is and how it works. Additionally, he sets a goal for the funds he expects to receive.
Then, people interested in getting the product at a lower cost or simply sympathetic to the project make donations. And finally, according to the rules of the intermediary, the proposing company or person; receives a certain amount of money.
An advantage of this business model is that it can benefit from activity on social networks; the more people know that the project exists, the more money can be raised.
That is why it is recommended that months before starting the crowdfunding campaign, you already have your social networks active, constantly reporting about the product.
Sites like Facebook and Instagram allow you to pay a small amount for advertising and reach very specific niches.
Also, you should keep in mind that there are always deadlines to reach the amount of money you set as a goal. So an exorbitant amount is hard to come by.
Before launching a fundraising campaign, it is important to be very clear about the rules of the game; since each intermediary has different policies.
In some, if you do not reach the proposed goal, you receive nothing. While in others yes, but in exchange for a fee. In order not to be surprised, find out as much as you can.
Most popular Crowdfunding platforms.
It is clear that the success of a company after it is founded depends on many factors, but surely starting with a good amount of money makes things easier.
Proof that crowdfunding is a successful strategy are the startups that have seen the light of day, such as Moovit, Netflix or these startups that are some of the most supported by the public:
Famous projects founded with crowdfunding.
You already know, if you want to make your ideas come true… THERE IS NO EXCUSE!
And remember, if you are really interested in creating your own business and want to find more information on this subject, buy our book “How to create a company while you work. Discover how to manage your time, manage your money and motivate yourself while creating a company and working for another” , where you will find all the information you need to found your own company, without having to leave your job.
