Introduction to a Crowdfunding Platform
During the past decade crowdfunding has become a popular tool among emerging startups and businesses as an alternative source to raise finance for their venture. Even though this method is at its beginning stages, the future of crowdfunding remains bright. Augmenting the growth of this novel method and facilitating the link between the fundraisers and funders are the internet based sites popularly categorized as a crowdfunding platform. As you proceed through this article you will gain more insight to the world of a crowdfunding platform.
Classification
Unlike a one-on-one interactions between the capital seeker and the funder, a crowdfunding platform connects a large number of people to back a particular project which they find suitable enough. There are numerous platforms categorized as crowdfunding platform operational in the market, but most of them can be classified into two categories, on the basis of the types of services they provide, which include investment based and donation based. In the first case, the funders either get equity or some other monetary benefits for investing in a project whereas in the latter case the funder may get rewards like first access to the project, inclusion of their name in the project, etc. for their donation.
Pricing
Different types of crowdfunding platform follow different business model to price their services. Either they charge some percentage of the total funds raised or they initially charge the person for listing the project on their platform. Further, a crowdfunding platform may also charge the consumers for handling payments and providing other third party services
Market Development
Right now, most of the crowdfunding activities are limited to US and Europe which account for 80% of the total number of crowdfunding platforms worldwide with Europe consisting of 60% and America 20%. The most prominent crowdfunding platform among those is Indiegogo. Slowly and gradually these crowdfunding platforms are finding enough potential in the markets of developing countries like India.
Recent Trends
Many startups are further utilizing a crowdfunding platform to generate publicity for their ideas which has made these platforms an effective marketing tool. If a project is attracting a lot of interest on the crowdfunding platform, it may catch the attention of other offline sources of funding.
Conclusion
With the dearth of capital for many MSE’s and startups due to the lack of access to venture capitalist’s funds, or non-eligibility of bank loans, crowdfunding is becoming a major source of raising capital and the concept of crowdfunding platform provides an easy access to funds which are surely expected to grow further in the near future.
