05 Aug 2014
Using crowdfunding to grow your business
Crowdfunding is a rapidly growing industry that has gained a lot of media attention. In just over 5 years, people have raised over $1B on Kickstarter, the most popular crowdfunding site, alone. Yet something as new and innovative as crowdfunding can seem confusing to many small business owners. Without a basic understanding of the benefits, many are reluctant to use this simple way to gain access to funding.
The most obvious advantage to raising money through crowdfunding is financial. Obtaining a bank loan can be a long and difficult process. Most banks won’t give small business enough funds to be able to run their companies successfully. In addition, even when small business are successful in receiving a loan, interest rates can be very high and it can take a long time to pay back the money.
Crowdfunding is much easier.
Anybody can raise money on a crowdfunding platform so the uncertainty that accompanies the long wait for a loan isn’t present. Furthermore, for rewards and donation based crowdfunding, aside from a few fees, you get to keep all of the money that you raise, a significant advantage over having to spend years paying back a loan.
The benefits are not just financial. Crowdfunding is a great way to test your product and get feedback. Backers can tell you what they do or do not like about your idea and then you can tweak it accordingly to validate that there is an actual demand for your product.
Furthermore, those early adopters can create great publicity for your project by posting your product on social media and inviting friends to invest. Those backers act as your personal PR company. Their friends will inevitably see your project and suddenly, you will have a lot of supporters who will help you through the challenges of growing your small business.
To learn more about raising money for your great idea on a crowdfunding platform, check out the NYC Crowdfunding Meetup group.
This article was originally published by Alex Leibowitz who does PR and marketing for CrowdsUnite focusing on business development. His past experience includes working on various political campaigns. He looks forward to watching the crowdfunding industry grow.
Image by Rocío Lara.