A business venture without startup capital will go nowhere. Running a business requires funding to ensure the foundation is laid for future success. Yet, what are some of the methods to acquire capital? The common option is to seek a lender (i.e. bank) and take out a loan. Sounds simple enough, but is it always worth it? Stats show 59% of all acquired finances are now coming from crowdfunding (alternative financing). Let’s take a deeper look into what crowdfunding is and the role it has to play in the long-run.
Let’s begin by defining crowdfunding. This is startup capital acquired to pin up a venture. The purpose is to raise money in a short period of time based on an idea/concept/prototype. Most crowdfunding is done through platforms such as Kickstarter and Indiegogo.
It is pertinent to understand the term ‘crowd’ as there are multiple donors at once contributing to the cause. The funding will provide them with access to the product and/or service effective immediately after it has been put together.
What are the reasons to go down this path?
It comes down to being able to acquire funds as quickly as one needs them. The idea goes up and this helps spread the word and get a significant amount of donors to join up. Free publicity is never a bad thing and this is the beauty of platforms such as Kickstarter.
Crowdfunding is also safer and this is critical when seeking funds in such a manner.
+ $30 Billion Raised Around the World
Want to know how much has been raised around the world? In 2015 it is estimated that + $30 Billion will be raised through crowdfunding for startups. It is one of the finest methods for acquiring funds in a reasonable and quick manner. Why go through traditional setups when they are not going to yield benefits as desired?
Crowdfunding is the way of the future and provides enough capital to get going. Those who don’t maximize this option are missing out on an excellent opportunity to progress.
With 50+% of all crowdfunding coming out of North America, it is a significant option in this part of the world.
Additional Alternative Financing Options
Don’t want to go with crowdfunding? Are there any other options one can consider as a business owner? Yes, there are multiple other routes one can take in order to secure funds as needed.
Dividing the campaign and raising funds for each section of the business is a viable option for many. It enables the donor/lender to see where the funds are being allocated. Crowdfunding provides a generic look which perturbs investors, but why not give them something specific?
Another option is to seek out family and friends, which is a ‘go to’ option for many people around the world. This is often the safest loan to take, but one many people don’t wish to seek out. It is worth a look if all other options are out the window.
These are the intricacies of alternative financing and crowdfunding for those wishing to start up a new venture and want to do it the right way. This information should act as a guide for all financial decisions being made in the near future.
Jonathan Leger is a freelance writer and small business owner. He runs a popular question and answer website at http://answerthis.co