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What Is Crowdfunding? Understanding The Basics

What is Crowdfunding? Understanding the basics

In simple words, crowdfunding is a method of generating funds with the help of friends, customers, and individual investors by delivering an idea with a quality presentation which promises the audience better solutions. The fund seekers also have to hold certain rewards like sample product, equity, interest on the funds to attract crowdfunding. This method is comparatively successful than applying in a bank as it does not require any certain criteria to qualify for a loan. Crowdfunding is done through social media, online fundraising platforms, and community networks.

What makes crowdfunding different?

Crowdfunding is an unorthodox way of approaching business finance. If you want to start a new business, traditionally you had to create a plan, do the research, and create prototypes before approaching a limited wealthy pool of investors which included banks, angel investors, venture capital firms, and equity investors. If you fail to convince your investor, you will lose a lot of money and time on the meetings.

Today you can pitch your idea to a wider audience using the crowdfunding platforms and take small donations from them to create a big capital for your business. With a single platform, you can spread your idea at once so that you do not have to spend money and time on it. The online crowdfunding platform will automatically attract the right audience based on your product or service and help you get the right investments. The interested parties will have more ways to support you in your project.

Benefits of crowdfunding

Benefits of crowdfunding

Crowdfunding does not only connect you with a wider fundraising opportunity, but it also comes with several other benefits.

It helps your business to reach to a wider audience around the world. You can connect with thousands of investors and convey your idea in a fast and convenient method. This will help you raise your funds at a faster rate.

The online crowdfunding platforms also provide a better view of your projects by gathering information in different categories, including history, traction, offerings, value proposition, target market and audience, and more. All of such information is presented in a more professional way to impress investors.

You can also hire your own PR and marketing team through the online crowdfunding platforms. With their help, you can promote your business better and create campaigns through social media, newsletters, and other marketing strategies to grow your online presence. The PR and marketing team can help in getting better traffic to your crowdfunding page to generate more capital.

Improvement and efficiency

When you project your idea to a wider audience, you will face a lot of questions regarding your product or service. This can help you in finding out the loopholes in your plan when you come across a question you are unable to answer. Also, when you have a single profile to connect with the entire audience, the process of getting investment will automatically speed up. It will help in getting the investments coming while you can focus better on your business.

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