3 Main Benefits of Crowdfunding – Why It Rocks for Startups
These days, you can find a growing number of artists and start-ups using crowdfunding. This actually denotes the collaborative effort of people who form a network and accumulate their resources through the internet in order to offer support to efforts started by organizations or people.
How is Crowd-Funding Used?
Crowdfunding has been mainly used for supporting various activities, like development of freeware, producing movies, supporting start-up organizations, political campaigns, artists and even disaster relief. This is actually a crowdsourcing phenomenon. Kick Starter is one of the biggest crowd funding sites out there. Since its inception in the year 2009, it has managed to raise as much as $574 M.
Kick Starter has been able to arouse as much as $203 M only in the last 6 months, and the signs of its growth refuse to slow down. There are also other crowd funding sites such as Crowdrise, RocketHub, Crowdfunder and Indiegogo which are witnessing similar amount of success and growth.
3 Benefits of Crowd-Funding
Crowd funding has at least 3 major benefits for entrepreneurs:
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Capital accumulation – Gathering capital for funding new projects seems to be a difficult and uphill task for entrepreneurs across the globe. A perfect alternative seems to be crowd-sourced funding, which can help get the necessary funds for a venture as users can get the money readily without accumulating debt or giving up equity. Rather, entrepreneurs can try simple ways such as distributing gifts or products to the people funding their venture in exchange for their contribution. This is also referred to as rewards-based crowdfunding.
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Easier promotion – Crowd funding platforms also seem to be a perfect way to promote a new venture and make people aware of it. Crowd funding sites are usually free, and they offer various ways to get in touch with a larger population. For instance, businesses can market their own products and services and company mission through enhanced referral traffic to their official website for the company, word of mouth and social media channels.
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Customer satisfaction – Crowd financing also helps businesses get customer feedback much earlier. These suggestions are used by successful companies to improve their services, products and processes. With crowd funding, entrepreneurs can easily assess the reactions of consumers, implement the suggestions of users and test their bettered products before they are launched in the market. This can help companies to save a great deal of monetary loss and show that a business is willing to listen to and incorporate the suggestions of customers.
Keywords: crowdfunding, Kick Starter, crowd funding, crowd funding sites
