Why Are Entrepreneurs Turning to Rewards-Based Crowdfunding?
Are you contemplating launching a product idea on Kickstarter or Indiegogo?
If that’s the case, you’re not alone.
Crowdfunding allows businesses and innovators to raise cash from the general public via online supporters who are enthusiastic about new initiatives.
Websites like FundingX helps to generate crowdfunding for the product.
Starting a business used to be a make-or-break proposition. You had to go all-in financially, even though most start-ups fail.
All of that changes with crowdfunding.
You’ll still have to pay for goods upfront, such as:
Patents and prototypes
Using a crowdfunding firm
Nonetheless, it will save you a lot of money and danger.
And if you play your cards correctly and meet your financing target, you might be able to recoup all of your expenses after a successful launch.
Keep Your Equity
Rewards-based crowdfunding, unlike many other traditional ways of raising funds, allows you to retain total control of your business.
Sharks no longer grab a large percentage of your future income in exchange for seed money.
Equity crowdfunding, on the other hand, is exploding at a breakneck pace.
This is where you get to raise money from the public in return for stock, which can also be used to support your business.
Here at FundingX helps you generate crowdfunding.
Gauge Market Demand
Another benefit of reward-based crowdfunding is that it allows you to evaluate market demand before launching on an e-commerce platform.
Don’t get us wrong: e-commerce is a fantastic method to expand and develop your company, but what if your minimum purchase quantity is 1,000 units and no one wants to buy?
There are numerous advantages to starting a crowdfunding campaign before starting an online business.
- Gauge interest/demand for your product
- Build a crowd of dedicated customers; great social proof
- Test out which ad strategies work best for selling your product
Appeal to Future Investors
First off — crowdfunding in itself can do just that
Talk about making it big-time.
But even if your campaign has 1 / 100th of that success, it puts you in the conversation.
Big-time investors are interested in ideas, but they’re more interested in products that actually sell. A rewards-based crowdfunding campaign could be that proof.
Imagine coming to an investor and being able to say:
X amount of people believed in this project so much that not only were they willing to buy it, they were willing to pay a higher price to bring it to life. I raised X amount of money, and there is already great awareness around the product.
For most investors, this is going to pique their interest.
So if you’re playing for long-term success, crowdfunding is a great short-term strategy to get the ball rolling.