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Fund your startup with crowd funding

Fund your startup with crowd funding

Crowdfunding is the way to fund and kickstart your startup idea into reality. I believe that every dream and idea are meant to be manifested into reality, they turned up in you in the first place to give your life a direction, having said that, not all startups are lucky enough to see the day of light, it is not because that the idea or the service is not good enough but mainly the reason behind it is they lack financial grooming or meager people showing interest in the idea. Initial stage for a startup is very crucial where they require regular nurturing of funds to survive the incubation period before a startup really takes off and is able to survive on its own. I guess if you want to kick-start your startup then initially your first choice of finding financial support should be from friends and family members. This will cut your risk for committing to debt or interest wise financial aid, this will also keep your mind free from unwanted pressure to pay back to debtors and you can fully concentrate on your startup.

What is crowd funding?

Fund your startup with crowd funding

If you couldn’t find financial support from them then crowd funding is your unique chance to support your startup. What is crowd funding and how could it be helpful to you. Crowd funding is alternative finance option available over the internet through websites where a large number of people show interest in an idea or a service committing to support with a small amount of financial bid. As individually it does not burden a person because the amount is very small and though number is very large the total amount incurred is sufficient enough to support a startup. This way you can make sure that power of masses is utilized to manifest your intentions. Today crowd funding is not just used for financing startups but it also works for people who are looking for support for medical reasons like liver transplants or kidney dialysis. Raising money is now feasible if not easy due to internet and the idea of using the power of masses. The concept of crowd funding is the internet mediated platforms where there is an initiator who proposes an idea or a service to an individual or a group of people for raising funds. The mediating agency or the internet platform is the moderating organization which brings in both the parties together to launch the idea. Funding is not just limited to the entrepreneurial ventures but is also supports to people into travel, creative projects, artistic projects, medical expenses, social causes, marriages, surgeries. I have even seen people asking for crowd funds for a sex change surgery over the internet so there is no lack of people that can support any idea. As you reach out to people through internet this way you can reach to millions of people at one point of time, using any other way would gruesome and time consuming you just have to prepare a proposal.

How many types of crowd-funding are available?

Fund your startup with crowd funding

It is very interesting to know that they are many types of crowd funding available over the internet. And you could choose from the point of view of your entrepreneurial venture. Majorly what we have experienced is that there are two ways to raise funds in the arena of crowd sourcing per say first is the reward based crowd funding and second is the equity based crowd funding. Although there are other ways also that the crowd funding is manifested many mediator organization or platforms have their own unique way to seal the deal.

  1. Reward based: Reward based is the most common and the best way to raise funds in the crowd sourcing avenue. The intriguing part of reward based crowd funding is that you don’t have commit for a equity or royalty share to anybody for your finders. IN this way you just commit to give service to your funders from your startup. It like pre-selling the idea to you is the customers while you take payments in advance. Even if you cannot offer service from your startup you can also commit to give away free t-shirts with your brand logo print on the front. A gift or a pre service commitment is not compulsory, I have seen funding has been approved for a startup with no prior commitment, the funders it up to the initiator, if the venture becomes successful then the initiator could do anything for their funders as a token of thanksgiving or appreciation.
  2. Equity based: Very less common is the equity based crowd funding, where the initiator is legally bound to share its equity with the financial funder for a lifetime. It just like selling share of a business and this time it is prefixed. Sometimes the initiator even legally commits to share royalty for a life time in lieu of funds support. Equity based crowd funding is very less common as it requires legal bond between the parties and also the project initiator losses power of its venture by giving away equity shares.

The last and the least talked about crowd funding is the donation based crowd funding, this is a kind where the funds raised or given are purely from the point of view of doing a charity and no reward or equity is demanded or expected from the individual or groups from the funding side. Donation based crowd funding is usually done for paying for marriages, travel expenses, medical bills and community based social causes.

Fund your startup with crowd funding

What websites are organizing crowd funding platforms?

Initially it all started with one or two websites that was available over the internet back in few years time but now it has grown into new venture in its own game. To name a few websites that are reliable and good for project initiation are Kickstarter, GoFundMe, Seedrs, Crowdcube, these are the international platforms famous and reliable. For Indian paradigm there is PactGuru, Ketto, Wishberry, TheHotStart, Start51 and dream wallets. One word of advice to all of you before go and present your project proposal, all these websites work on their own way, some may have initial registration charges while few may have some rules which you have to go and read first. When abide by their rules only then you allowed for presenting your case. Many website may also charge you with penalty if your startup fails so be careful before you apply. It is requested to all our readers to please let us know about how you liked our article on crowd funding also do check out our next article on tips for successful campaigning for crowdfunding for your entrepreneurial venture.

Please do also read our blog on crowdfunding tips for an effective campaign.

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