Sat, 02 Dec 2023

The Benefits of Crowdfunding: An Essential Guide

08 Jul 2022, 07:33 GMT+10

The world has seen many startups come up and explode within the last two decades. This convenience is only due to the modern platforms. These platforms have made it easier for people with ideas to turn their dreams into reality. Do you have a business idea too that you think can change the world? If the thing stopping you is a lack of capital, then Crowdfunding is your best bet.

Equity ground funding continued its growth last year as well. Crowdfunding crossed the 1 billion dollar mark in 2021. Even governments and agencies are now taking crowdfunding platforms seriously. The SEC even introduced some of its guidelines regarding Crowdfunding. Now, anyone can raise a capital from $50 to $50 million via WeFunder Crowdfunding.

Crowdfunding is not only limited to a few countries only. It is spreading around the globe. Economic markets like Turkey are predicted to experience record-breaking growth in crowdfunding activities. More than 300,000 jobs were created in the US due to projects started through Crowdfunding in 2019. The crowdfunding market is predicted to grow to more than 200 billion by 2025.

Not a while back, Crowdfunding was not taken seriously by large investors. The perception was that people who couldn't get funding from conventional methods turned to it. Things have taken a better turn now. Even venture capitalists are pouring large sums into crowdsourcing projects.

However, before you decide, let's look at some advantages of Crowdfunding.

The Advantages of Crowdfunding

1: A great alternative to bank loans

Crowdfunding offers an excellent alternative to hefty bank loans. Banks offer loans at high-interest rates, and the criteria to get them can be strict. With crowdfunding, you will get a more convenient form of financing.

Not just that, Crowdfunding also allows the investors to have a stake in your business. Having equity investors instead of a bank demanding regular interest payments will relieve the load off your shoulders.

2: Establishing a fanbase for your project

Most startups waste a lot of time pitching their ideas to investors. Finding like-minded investors for your projects is tough. Platforms like Wefunder allow you to adopt a pull strategy instead of a push strategy. Investors are likely to approach you if they genuinely like your business idea.

Wefunder will save you hours of useless sales pitches. If your idea has the potential, you will establish an online fanbase for your project.

3: Feedback and remarks

Every individual thinks that the idea they pitch has the potential to change the world. However, this is not often the case. There is always room for improvement, even if your business idea sounds impeccable. If you don't realize this, you may end up quitting altogether.

Crowdfunding platforms have users that act as insightful critics. These are seasoned individuals who might even drop life-changing tips and genuine feedback.

4: Finance non-conventional ideas

Traditional venture capitals only go for ideas that sound familiar. If you have an out-of-the-box idea, chances are that getting investment will be even more difficult for you.

Conventional banks will not want to touch you even with a 10 feet pole. In this situation, you can turn to crowdfunding platforms. You are more likely to find people who will help kickstart your projects.

5: Transparency

Crowdfunding platforms offer transparency to the whole process of investing. Investors can easily track your progress. If your project shows progressive signs, investors are more likely to share and promote it.

Startups will also be able to track their performance. Regular feedback will help them improve their ideas. This will help in creating an environment based on trust.

Top crowdfunding websites you can use in 2022

There are many crowdfunding websites you can use in 2022 to kickstart your project. Gofundme is one of the biggest names when it comes to Crowdfunding. Patreon is another common platform used amongst digital content creators.

Many successful projects have also emerged from Kickstarter. Another crowdfunding website Wefunder has recently gained a lot of trust and reliability in the space. Many investors and projects highly rate Wefunder with high regard.

How will Crowdfunding evolve?

Every industry undergoes continuous revolution and changes. Crowdsourcing is a new industry and will become more mainstream in the future. Blockchain can prove to be a key component in the growth of this industry. Decentralized finance and smart contracts are revolutionizing the financial space.

The main motive of Defi is to establish a level playing field. It aims to end the monopoly of major players and banks. This idea is the soul of Crowdfunding as well. A major cryptocurrency, Cardano has launched its test net for crowdsourcing. More cryptocurrencies are likely to follow in their footsteps.

Bottom line:

With its unprecedented growth, it is clear why Crowdfunding has become so popular. It offers an excellent solution to the masses who can't generally reach conventional financial institutions. It adds value to projects and allows everyone to invest in startups. Platforms such as Wefunder act as promotional platforms and finance hubs for these startups. With all these factors, the industry is expected to grow on an upward trajectory.

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