How Small Business Benefits From Crowdfunding
We’ve been hearing the term crowdfunding a lot in the media so let’s discuss what it is and how small business benefits from crowdfunding. Does your business need capital for expansion? We’re headed to the first ever Crowdfunding Bootcamp on October 9-11, 2012 and you’re invited!
What is crowdfunding?Crowdfunding is an excellent way for entrepreneurs to receive the financing needed to execute their business expansion or to build their start-up. It is a warm community (usually online) that helps fund dreams and ideas. It is also known as Hyperfunding, Crowdfinancing, and Equity Crowdfunding.
Types of crowdfunding:There are three different types of crowdfunding known as donation, debt and equity based. Donation is whenmoney is given to the entrepreneur in exchange for a gift. Debt based crowdfunding is when the investor gives money to the business with a future financial reward such as a percentage of the profits. The Shark Tank television show is an example of debt funding. The third type of crowdfunding is equity based funding in which the donor receives equity in the business.
While crowdfunding has existed for a long time, the birth of crowdfunding websites like Kickstarter coupled with the passing of the nation JOBS Act, have created a renewed interest in financial support of entrepreneurs. With bank loans and seed money harder to come by, this is excellent news. In addition to Kickstarter which supports artistic projects, there are others focused on start-up businesses, mobile phone apps, inventors, creative projects, non-profits and many more ideas and dreams.
Other benefits of crowdfunding include the entrepreneur having an engaged crowd to gauge enthusiasm for their idea. They have a ‘live’ focus group to help evaluate the current marketing strategy and to market the idea before it is even for sale! As with any great idea, there is risk for another creative mind to borrow that idea and run with it. Having a supportive power team is a great way to mitigate risks like this.
Crowdfunding is here to stay and is an incredibly efficient way for entrepreneurs to raise capital for their billion dollar ideas. Combine the creative Entrepreneurial Spirit, the advent of web-based campaigns with energetic support of the Crowd, and it appears as though everyone will win in this new era of Crowdfunded businesses and dreams.
Join us at the Crowdfunding Bootcamp to learn more and meet the people who can get your business funded!