crowdfunding disadvantages

4 Biggest Crowdfunding Disadvantages you need to know

“Every coin has two faces.” Quite a popular phrase, isn’t it? Well actually, it is true. Every single thing does have two aspects – The good and the bad. Plus, a lot of shades of  gray! Such is the case with crowdfunding as well. Though it is one of the most revolutionary fundraising concepts. But still, there are a lot of crowdfunding disadvantages. Here are a few crowdfunding disadvantages which every entrepreneur needs to know.


#You need to be “Ordinary” or “Larger than life”!

One of the biggest crowdfunding disadvantages is that you need to create something visible. Your idea needs to be a simple package. Since the backers pay for your idea, it is necessary that they understand it. And making a crowd understand a complex idea? That can be very tricky! Thus, you cannot pursue an idea which is too much ambitious.

Because the crowd can either understand a simple idea. Or you have to go for a larger than life thing! But remember, that is a big big risk to take.

#Your brand name can be completely ruined!

Reputation is everything that matters in the business industry. Your name is your brand value. And if it ever gets ruined, it is almost impossible to revert the process. This is where crowdfunding disadvantages come into the situation.

Let us understand this by an example. Suppose, you launch a crowdfunding campaign for your company. And due to reasons, it doesn’t become successful. Now your brand name has a tag of a failed crowdfunding campaign attached to it. And no matter what the reason is, people would believe that it is due some flaws in your product. This thing is possibly the biggest of all crowdfunding disadvantages.

#Your idea can be at a risk!

When you want to crowdfund your campaign, you have to be open about your project. Since you want to convince people to invest in your idea, you have to share it all with them. Thus, you have to disclose your idea in a detailed manner so that people would invest in it. This calls for one of the most severe crowdfunding disadvantages – The risk of being copied!

Since you are displaying your complete idea on a platform, there can be some people who copy it. Unless your idea is already patented, anyone can easily steal your idea.

#Possible Legal Actions

When people invest in your idea, they are expecting some good returns. They either want a product or some monetary profit. Now you may be honest and use all the money for a successful project. But sometimes, things can go very very wrong. Your project can fail even after being crowdfunded. And then, you have to face one of the most dangerous crowdfunding disadvantages – The Legal Actions. Your investors might sue you and it can take a lifetime for you to come out of it.


Though it is a very good idea. But the crowdfunding disadvantages can be quite severe. You don’t need to skip the idea because of these crowdfunding disadvantages. All you need to do is stay a bit cautious.

 

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