Top 5 Advantages of Crowdfunding

Crowdfunding—putting forward an idea of a product or a service in front of the internet community and requesting investments from individual investors in exchange of rewards—contributes billions to the economy and creates hundreds of thousands of jobs every year.

Crowdfunding is how many entrepreneurs have secured funds to launch their project and become successful. You too can hop on this bandwagon to riches if you have a great product idea but not enough cash.

Here are some key advantages of crowdfunding:

1.     Access to capital

This is no brainer. Access to capital is what pulls entrepreneurs to crowdfunding.

Unlike in past, when the only ways entrepreneurs could raise capital outside their network was through accredited investors, banks, and venture capitalists, today businessmen can also raise capital through crowdfunding.

Crowdfunding is a win-win situation for unaccredited investors too, who can generate impressive returns on their investments, more than what any other financial instrument can ever offer, if they pick the right startup.

2.     Hedges risk

Anyone who’s ever launched a company will tell you startups are risky and challenging, and getting hands on enough cash is not the only problem you face. Other problems include expenses which are just not possible to predict, challenges in market validation, and investors who demand a share in your business to help you launch it.

You can hedge the said risks by launching an impressive crowdfunding campaign, and also gain important learning experience. Crowdfunding allows you to win market validation. It also obviates your parting with equity before your business takes off.

3.     Gets you attention and web traffic

Running an active crowdfunding campaign is fast, easy, and free. You can use various social media channels to present your idea of a product or service and company’s mission and vision to the internet community. In addition to generating much needed funds, an active campaign brings traffic to your site, as potential funders and users attempt to know more about your venture.

4.     Get your loyal customers to become investors

The beauty of crowdfunding is that anyone can take part in it, even your customers. The main advantage of having your customers invest in your business is that they will stay loyal to your brand and become its strong evangelists.

5.     Get feedback

Through an active crowdfunding campaign, an entrepreneur can engage audience and receive feedback, comments, and ideas. Feedback from potential investors can bring to your notice certain aspects of your businesses which you’d never thought of.

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