5 Top Benefits of Crowdfunding
Whether you are starting a business, want to promote a cause, or need money for medical bills, crowdfunding provides a unique way to reach your goals. Through the crowdfunding campaign a creator can gain visibility for their project that would not ordinarily be attainable through traditional methods. Using a no upfront fee crowdfunding platform like Fundpey.com helps to validate your business goals and draw investors and backers to your campaign. Below are what I consider to be the 5 top benefits of crowdfunding.
1. Getting the capital you need.
Seed capital is difficult at best to acquire in the beginning stages of a business project. Crowdfunding is a much more efficient method of getting the funding that you need than going to a bank for a loan. Most banks will typically require some form of collateral to loan funds to a start-up. The major number of start-ups will not qualify for these bank backed funds simply based on the fact there is little to no evidence of the ability to repay. Venture capital firms have money to invest, but they are pulling from the other end and want to see performance before proceeding forward with investment money.
In comes the crowdfunding platform. With no cost to start your campaign, realizing your project goal just became a lot easier. Everything is in place on the platform and designed to help get your product and message out. With tutorials and blogs to reference, any questions pertaining to crowdfunding are at your fingertips. Virtually every question is answered for the potential creator of a project. Zero capital is required to get your project started. This progress should get the attention of traditional loan processors ( banks), and also venture capitalist firms that may have been hesitant to initially invest. Thus, making your campaign more attractive to all investors.
2. Provides validation for your project.
A crowdfunding platform is a place to provide validation for your cause or product. After you have gotten the support of backers, you have answered the validation question for future backers. People are more likely to commit to your campaign when there is traction for the campaign. One of the best benefits of crowdfunding a project is that these early backers will encourage new investors. Conventional investors may balk at your idea. Crowdfunding investors are more likely to seriously consider your project or cause. This can lead to investors becoming loyal customers.
3. Encourages collaboration with backers.
Your backers will not only help to finance your campaign, but will offer feedback on your product or cause. Most people have a genuine desire to help in any way possible. This is a great resource that would cost thousands of dollars if you had to hire a consulting firm. Although the help offered might not be exactly what you need, you can weed through the feedback and take what you need. Even constructive criticism moves your product forward and helps to prevent mistakes in the future. Testing the public’s reaction to your project is a way to determine the potential value of a product. The lesson here is to listen to all comments and pull out the relevant information that moves your campaign forward.
4. Get the word out.
Of course the benefits of crowdfunding would not be complete without considering the social aspect. Press coverage and social media has the potential to elevate your campaign to great success. Raising awareness for your campaign through social media is a very cost effective. Your backers will share their experience with their friends and bring in a new round of investors with them. These new backers would not have been able to contribute without the social aspect of the crowdfunding campaign. This type of organic awareness of a crowdfunding project attracts investors who hope to get in on the ground floor of a project. Using social media is the crux of a crowdfunding campaign. Everyone has heard the word viral. A viral campaign on social media is what any creator should ultimately strive for.
5. Free to use.
You have decided to run a crowdfunding campaign. Most platforms are free to use. This feature is appealing to start-ups that may have a great idea but not a large marketing budget. With the exception of the time to fill out the project info online, the cost is nearly zero for starting a campaign. At this point a campaign creator will be positioned to begin to receive funds for their project. Another point that is just as important to gathering funds is the real value in crowdfunding. That is raising brand awareness. The cost of putting your product or cause in front of people is extraordinarily expensive. Without a free, centralized platform to showcase your campaign, creators would almost be unable to bring their ideas to market.
The most important take-away here is free. Get it while you can!