Towards the end of the 20th century, a new fund raising technique became successful. And today, within 2 decades, crowdfunding has found a lot of popularity. More and more businesses are turning towards it. Amidst all this hype about it, it is important to go to its depths. It is necessary to know that is it actually all good? Or are there some drawbacks too? And what are the crowdfunding disadvantages? Let us find answers to these questions!
#Just good for small bucks!
Crowdfunding surely helps businesses raise funds. But it is a rather small amount. You cannot rely upon crowdfunding for a big business idea. This is one of the biggest crowdfunding disadvantages.
#It takes time!
Crowdfunding is surely not a quick process. This is one of the crowdfunding disadvantages faced by many! In case you want to launch a business in a short span of time, crowdfunding cannot help you. It has to be a pre-planned thing.
#The hidden costs!
You need some investments for launching a successful crowdfunding campaign. Businesses usually plan a budget and start a campaign. But more often than not, sticking to the budget seems difficult. This is one of the most tricky crowdfunding disadvantages. As this can cause you some serious troubles.
#It is just Black and White!
The list of crowdfunding disadvantages says that crowdfunding is a black and white situation. There are no greys whatsoever! If you reach your target, you are great! But, if you don’t, even by a small amount, it is no good! The logic behind this is quite simple. When you fix a target, you understand that that much is your need. If you don’t reach that amount, you can clearly not work. SO you should not continue your project. Since, this way, you would be wasting the other money too.
#Your reputation is at stake!
A failed project is not that big a deal. But you must realize that crowdfunding disadvantages are more than that. It even deals with your reputation. The tag of a failed crowdfunding project remains with your company. You may even revive it successfully in the future. But this remains as a loophole forever.
#Future Financing!
In crowdfunding there would be a lot of small inexperienced investors who will attach to your name. By investing small amounts, they would become the part owners. But in future, reputed businesses might not like the idea of working with such a company which is shared by a lot of small investors. This is one of the biggest crowdfunding disadvantages on longer runs.
#Probable legal issues
While investing smaller amounts, investors expect quick returns. And these are usually inexperienced investors. But business doesn’t work that way. Your company may take time to grow. Or sometimes, it might even fail. And that results into one of the most serious crowdfunding disadvantages. This may cause the investors to raise some legal issues. With a new business and new dreams, who wants that?
Though there are some crowdfunding disadvantages, they can be tackled. Working systematically and under proper guidance, can save you a lot of trouble.
