Top 5 Advantages of Crowdfunding (2017 Update)

Crowdfunding, a great source of money for startups
Crowdfunding, a great source of money for startups

What is Crowdfunding? It is putting forward an idea of a product or a service in front to the internet community and requesting investments. These investments can be from individual investors or companies in exchange for rewards. This contributes billions to the economy and creates hundreds of thousands of jobs every year.

It has help many entrepreneurs secure funds to launch their project and become successful. You too can hop on this bandwagon to riches if you have a great product idea but not enough cash.

Here are some key advantages of the advantages:

1.     Access to capital

This is no brainer. Access to capital is what pulls entrepreneurs to crowdfunding.

Unlike in past, when the only ways entrepreneurs can raise capital outside their network was through accredited investors, banks and venture capitalists. Today, businessmen can also raise capital through crowdfunding.

Crowdfunding is a win win situation for unaccredited investors too. They can generate impressive returns on their investments. Sometimes even more than what any other financial instrument can ever offer, if they pick the right startup.

2.     Hedges risk

Anyone who’s ever launched a company will tell you startups are risky and challenging. Getting your hands on enough cash is not the only problem you will face. Other problems include expenses which are just not possible to predict, challenges in market validation. In addition, you may also face investors who demand a share in your business to help you launch it.

You can hedge the said risks by launching an impressive crowdfunding campaign and also gain important learning experience. Crowdfunding allows you to win market validation. It also obviates your parting with equity before your business takes off.

3.     Gets you attention and web traffic

Running an active crowdfunding campaign is fast, easy and free. You can use various social media channels to present your idea of a product or service. You can also showcase your company’s mission and vision to the internet community. In addition to generating much needed funds, an active campaign brings traffic to your site. This will allow potential funders and users to know more about your venture.

4.     Get your loyal customers to become investors

The beauty of crowdfunding is that anyone can take part in it, even your customers. The main advantage of having your customers invest in your business is that they will stay loyal to your brand and become its strong evangelists.

5.     Get feedback

Through an active crowdfunding campaign, an entrepreneur can engage audience and receive feedback, comments and ideas. Feedback from potential investors can bring to your notice certain aspects of your businesses which you’d never thought of.

If crowdfunding is not an option for you, you can always approach a bank or licensed money lender. Licensed money lenders often have faster processing times and higher approval rates. If you need a loan, you can always approach us. We have been a licensed money lender in Singapore for more than 10 years.

Contact us today if you need a loan!

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Crowdfunding seems to be a popular choice now among startups! It's a great chance for VCs to be able to find new businesses too!
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