Thursday, 8 September 2016

Crowdfunding: Finding the best Platform

One of the earliest instances of crowd funding of a project can be traced back to the year 1884, when the Statue of Liberty first arrived in USA. At the time, the pedestal it stands on today hadn’t been built. Entrepreneur Joe Pulitzer asked residents of New York to donate towards the cost of constructing it in exchange for a mention in his paper. Donations poured in from big business to school children and the target was met. The format, over the years, has undergone changes, spreading with the rising popularity of internet, and has moulded into a popular model which helps with the raising of funds.

Crowdfunding is the practice of funding a project or venture by raising monetary contributions from a large number of people, today often performed via internet-mediated registries. In recent years, more and more platforms and websites have been launched, all offering crowd funding in one way or another. These websites allow people to raise funds for everything from real estate, charity, schools to business. These crowd funding sites give entrepreneurs a wide choice of options on  not only for fund raising but also a platform for their campaign.

But the wide spectrum of options bring along with it the predicament of choice of which platform is best for budding entrepreneurs. To determine the most suitable crowd funding source for your idea, here are certain points you should keep in mind -

·  Type of product and its current stage

       The type of product you create will determine where you can go for funds. Another factor that will influence is what stage your project or product is currently in. Taking an unrefined concept or an unpolished idea to crowd funding sites will not give you any leads.

·  Funding history of the site

       You should see if similar products have been funded and how it successful it was. You need to be sure the platform caters to your product and target audience before starting a campaign.

·  Funding Model

       Crowdfunding sites run either rewards, donation, equity, lending or hybrid-based funding models. Having a clear idea of how each one works and how it would impact your business is of primary importance.

·  Reach of the platform

       These platforms are usually the first interface in your marketing process. The communities developed on these platforms can play an important role in the campaigning of your products

·  Cost-Benefit Analysis

       Cost-benefit analysis of each site should be done to see which platform suits you the best, your reasonable profit margins with the campaign, time frames that you can meet etc.

Crowdfunding has become the way to raise money for all kinds of projects, especially since the onset of digital era. Businesses, nonprofits, artists, and entrepreneurs in all sectors have succeeded in running startup funding campaigns on the many crowdfunding platforms available. There is no denying the huge amount of money that crowdfunding can raise, but it might not work for every project. Many entrepreneurs have failed, because they didn’t fully understand the implications, got their data wrong or didn’t chose the correct platform. You need to be well informed and well prepared. Only by diligently doing home work, gathering necessary data and proper in-depth analysis will you be able to assess the workability of using crowd funding for your business, and successfully finance your dreams into a reality.

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