There are different methods to raise funds in a business. One can approach banks to get a loan, or one can approach VCs or Angel investors to invest in the company. Many people often get stuck here and haven’t explored other methods of fundraising which is beneficial and also helps them in many other ways.
This post mainly focuses on alternative ways of raising funds, especially crowdfunding, on how crowdfunding can totally turn your business strategies. It is indeed a game changer.
At first, let’s talk about other business strategies.
A venture capital is a type of equity. It is the funding provided by individual VCs or venture capital firms to the startups at their initial growth stages. If you’re someone who owns a startup, then you might know how difficult it is to get funding this way.
If a startup successfully gains funding via this manner, then it’s a lottery for them as VCs generally invest more than 1 Million.
However, getting funding from a VC or an angel of that manner can be equivalent to squeezing blood out of a stone.
Many banks are now providing personal and business loans to people based on their type of business or profession. In some cases, it’s mandatory to keep a collateral. There are tons of formalities the bank wants you to complete before you get a loan. It’s often a lengthy procedure. But, it’s 2017 and who has got time for all these lengthy procedures isn’t it?
That’s when people wanted some alternative. An alternative which is comparatively easy and more effective, without undergoing these lengthy procedures.
Crowdfunding is the process of raising funds from people to fund your project or cause. The people can be anyone. It usually begins with family.
There are many methods of crowdfunding one can follow according to their need:
1) Equity-based crowdfunding
3) Reward-based crowdfunding
4) Debt-based crowdfunding
A business strategy can revolve around these crowdfunding techniques. Do keep in mind that in a country like India, Equity-based crowdfunding is banned.
A freshly established company can try using donation-based crowdfunding or reward-based crowdfunding rather than debt-based crowdfunding. As debt-based crowdfunding is considered riskier for a newly established company. These techniques can be applied online and offline. Although offline crowdfunding campaigns have witnessed massive success, online crowdfunding campaigns still hold the edge in terms of the cost and the reach. The cost of an online fundraising campaign is cheap and it has the capacity to reach any nook and corner of the world, which isn’t possible in the case of offline crowdfunding. To make all this process easier, crowdfunding Indian sites like Milaap, start51, Ketto.etc have come up. One has to simply register as a fundraiser with a site and upload pictures, tell more about the company and the product, set the target amount which is required and set the target date. Voila! your fundraising campaign has been set up in just a few minutes. Many companies like Sony have resorted to crowdfunding, which only proves that crowdfunding is indeed one of the essential ways. A company can launch their product on these crowdfunding sites and apart from simply raising funds, it also helps in people evaluating the idea and ensures a good outreach to your brand. Many brands have launched themselves making proper utilization of crowdfunding platforms, you can do it too.
But, executing a crowdfunding campaign is a tedious task. A good crowdfunding campaign generally requires 6 months of preparation to execute it and if not planned/executed properly, can produce negative publicity to the company.
Switch to crowdfunding today and witness a new way of raising funds.