Crowdfunding is asking a crowd of people to donate a defined amount of money for a specific cause or project in exchange for various rewards with the help of efficient crowdfunding platform.Crowdfunding platform makes use of the vast networks of friends, family and colleagues through social media websites like Facebook, Twitter and LinkedIn to get the word out about a new business and attract investors.
It is now very possible that you have a great idea in mind,and it would be really successful with the help of best crowdfunding platform for that great idea. But apart from crowdfunding platform popularity in today’s world there are some advantages and disadvantages of using the crowdfunding platform for fundraisers, entrepreneurs and investors.
ADVANTAGES OF CROWDFUNDING PLATFORM
Can Raise Funds Easily:- Crowdfunding platform plays a major role to raise funds for any idea or startup to convert it into a successful project.It helps fundraisers & entrepreneurs to achieve their ambition for their idea without any hurdles.
Low Risk :- Idea for starting up a business or introducing a new kind of products/projects has some risk involved in it. There are lots of expenses the entrepreneurs have to face while developing a business idea. But, with the help of crowdfunding platform, they can raise money for transforming the idea into a full-fledged project. It protects the financial risk greatly and other emergency situation smoothly.
Valuable Marketing Tool :- Crowdfunding platform proved to be the best marketing tool as fundraisers can easily reach numerous target audiences for explaining their ideas to raise funds even before it is launched in the global world.It is the revolutionary tool which helps them to get larger exposures for their idea. They can share their ideas on many social media and attract lots of backers to support them financially.
Benefits To Investors & Backers: – Crowdfunding platforms provide various kinds of benefits to the investors. For example in reward based crowdfunding backers will get intangible or non-financial returns as rewards for pledging their money for the charity purpose or any good causes. In equity crowdfunding platform backers, will receive the financial returns like dividend from the company, becoming the shareholders of the company and getting the voting rights to take decision for certain issues.
Feedback From Public :- Sharing your idea, you can often get feedback and expert guidance on how to improve it. It is a good way to test the public’s reaction to your product/idea – if people are keen to invest it is a good sign that the your idea could work well in the market.
DISADVANTAGES OF CROWDFUNDING PLATFORM
Expose Of Idea :- While entrepreneurs submit their idea to raise the funds there is a possibility for other people to copy the ideas from the crowdfunding platform.With the help of getting copyright for idea entrepreneur can protect their idea. FUNDRAISINGSCRIPT provides such kind of inbuilt functionality to users & entrepreneurs to launch their own idea from preventing other people to copy ideas.
Silly Idea Get Funded : – Daily millions of ideas are getting funded through crowdfunding platform, but all are not reaching its success within the stipulated time period. Those idea which are important to come into reality or which has some good solution for previous problems are lacking because they get less assistance from crowdfunding platform and as a result they are getting less number of investors for backing their project.
Building A Hardcore Plan :- After choosing appropriate platform which is best for idea, you need to do a lot of work in building up interest before the project launches – significant resources like time, money, manpower etc may be required.
All-or-nothing :- If you don’t reach your funding target, any finance that has been pledged will usually be returned to your investors and you will receive nothing.Amount will be transferred to their account only when they complete the projects profitably.
Apart from its disadvantages Crowdfunding platforms are multiplying around the world and the sums that they’re raising are growing exponentially.While choosing the appropriate crowdfunding platform, every fundraiser has to keep in mind about all the pros and cons of listing their idea into this platform.