Reason Why Crowdfunding is Ideal for Small or Medium Level Businesses
The notion of crowdfunding emerged in the late 1990s and gained massive popularity later on. The concept of fundraising has been transcended to a novel yet effective dimension. By leveraging online possibilities, gathering funds from diverse sources has become the new norm of financing. Today, figures say, a total of $34 billion has already been raised so far through crowdfunding campaigns. In fact, it contributed $65 billion to the global economy. With an average success rate of 50%, crowdfunding is considered the most effective fundraising approach in this millennial era. This document particularly focuses on aiding small businesses, introducing effective crowdfunding strategies that facilitate their efforts to get enough funds and to take their business off the grid.
Flexible Payback Terms
Relying on banks to raise funds was a prominent option not so lately, however, the lack of easiness and flexibility in terms and procedures make it extremely hard for small and medium-level businesses to achieve their target fund. Moreover, when it comes to banks, the interests have to be paid off, the processing fees will be included as well. Also, the application process will take up to 3 months, which isn’t acceptable for any progressive business scenarios.
In contrary to this, individual crowdfunding platforms are those who decide the payback terms. lenders take a small percentage of funds raised as procession fees, and the application process duration is solely based on how long you want to run the campaign.
Helps Manage the Campaigns Better
The concept of fundraising is as old as the history of trading. And when you decide on the mode of borrowing, you must have a clear understanding of the requirements of your business. However, the main drawback of relying on traditional banks for fundraising is that you have to pay back the debt with interest over time. While the crowdfunding approach is much flexible, also give you options to organize your campaign either as equity or debt investment campaign.
In an equity crowdfunding campaign, you can sell some of your ownership in the company to acquire funds. Also, you can offer some kind of rewards to the donors, which can be the product itself if needed.
Effective Marketing have an Influence on the Outcome
Traditional bank loans are not the easiest way to raise funds, the bank asks for your business plans to understand the source of your revenue, ultimately to make sure how you are going to repay the debt. However, the way crowdfunding software work is entirely different. Crowdfunding platforms often refuse the funds raised, if the business fails to achieve its target. And this why marketing is considered a crucial aspect in crowdfunding campaigns. In fact, the success of your idea is your responsibility and marketing can facilitate your efforts to reach those who are interested in your plan.
Improved Investor Relations
Even though crowdfunding is known effective, there are alternate ways in which you can raise the money you need. One can approach various individuals/investors and share their idea to convince them to fund the concept. However, to manage these multiple investors isn’t as easy as it seems. In contrast, an equity crowdfunding platform pool the funds into a single investment, making the reporting requirements easier to handle.
Want to Kickstart a Crowdfunding Business? Engage Agriya’s Premium Ready-made Crowdfunding Solution
Even though we have shared the potential benefits of crowdfunding for small businesses, the possibilities of the same as a business are huge as well. Since the major concern in any crowdfunding business is developing a software platform, it is significant to find the right technology partner to assist you. Agriya has been in the software business picture for 2 decades and has extensive experience and grasp in this particular development scenario. When it comes to crowdfunding businesses, Agriya has lately introduced a comprehensive ready-made solution, a full-fledged Lending and Borrowing software to support millennial crowdfunding businesses.