Crowdfunding is a process or a platform where people raise money in large numbers and later use that money to finance their businesses. The internet is one of the platforms that is used by people to raise money. There are so many other platforms that can be used in crowdfunding as long as people understand each other. In the business world, crowdfunding is becoming a thread. In the US, there has been a research that has been conducted and it shows that there are over 600 million dollars that have been collected by business men using these platform. This is an indication that crowdfunding is here to stay and it represents a major and a new source of funding for new businesses. This also, happens to be a non -profit funding to people who are seeking contribution and to the talented artists who are seeking recognition for their creativity.
There are so many crowdfunding platforms that are used such as Kickstar, Indiegogo, and LandingClub. In these platforms donations are sought and as a result, you get a special compensation. Each and every site have their unique terms but the general concepts in all the platforms is the same. Another use of crowdfunding is it be used to collect loans as well as royalty financing. Taking an example of a platform like Lending clubs where the members are given a chance to invest directly and borrow money from each other. They are able to do this because the presence of businessmen is eliminated in between the banking transactions. The idea of crowdfunding platforms is bringing businessmen and investors together. Another aim of this platform is selling the company shares or the ownership stake in the company on the crowdfunding websites.
The main role of crowdfunding is assisting in startup or early-stage companies an opportunity to launch their products and services without exposing the entrepreneur loan officers who are offering them with the loan. If a Crowdfunding platform is successful it offers businesses with the financial support they need and it also creates a base for customers who feel it is their duty to patronize the business for they have a steak to be successful. The benefits if crowdfunding is helping other people start up their businesses. Crowdfunding can be a waste of resources if the campaign of crowdfunding is not well arranged. Despite the advantages of crowd funding it also have its own disadvantages. For you to be successful in the crowdfunding campaign you can involve family members, friends, and well wishers who will be willing to share your business passion with you. They will also help you continue the campaign as they encourage others to join the platform.