Crowdfunding as a community investment opportunity
Chances are you’ve heard of KickStarter which is equity for creative projects such as movies, music and various art. Now, it’s been revealed that the same idea can be applied to start-up businesses. There are whispers in the major technology and entrepreneur circles that it’s the future of investing and here’s what you need to know:
[success]1. What Is Crowdfunding?[/success]
Crowd funding is by definition, “funding a project or venture by raising multiple small amounts of money from a large number of people through the Internet.” This is an ideal new way to gather money for a start-up without the pressure of having to convince one or two investors for a large sum of cash. Instead, multiple people can help you raise capital just by investing a small amount as long as they believe in your business and your potential for success. This practice is already a huge success in Australia, the Netherlands, and the UK with countries like Canada, USA and Italy showing growing interest in this start-up funding idea.
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[success]2. How does it work?[/success]
Start-up owners know how intimidating it is to approach an investor and ask for money, but by posting an investment opportunity on a crowdfunding website where there is no pressure to invest huge amounts (cash they may never see again!). The idea behind crowdfunding is to find like minded individuals and sell them your idea. And this is funding raised by the general public, not begging your friends and family for money or walking into the Dragon’s Den. That means that if people are really funding your startup, they want to be a part of it, and can convince others to do the same. It’s like marketing and investment all rolled into one. We might make it sound easy, but be warned, getting people interested in a business that may or may not succeed it much harder than it sounds. Make sure your business plan is as thorough as it can be and really prove how passionate you are about it.
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[success]3. Which sites are the best?[/success]
We’ve already mentioned KickStarter for more creative ventures, but for this type of crowdfunding you may want to look into RocketHub. There’s also WeFunder which boasts over 12 million dollars raised so far and PeerBackers which is great for entrepreneurs. Quirky is a website that lets investors know how their investments are doing and can follow them online. There are also apps to look into like AppFunder which is a specific crowdfunding app to fund the creation of new apps. Before you settle on a crowdfunding site (or app!) be sure to really do your research and pick the one that’s right for you and the type of start-up you need funding for.
