How Can Crowdfunding Help YOU ?
Before learning about how Crowdfunding can help you, you need to first understand what Crowdfunding is. So, take some time to read this article that we wrote.
In crowdfunding, there are two entities. One is the Campaign creator who creates a campaign and starts raising fund. The other is a Backer, who pledges certain amount of money to a campaign. The advantages are different for these two entities. Let us now see what are the advantages:
Campaign Creator
If you are a startup or SME, then the most important advantage is Product Market Validation. If a lot of people are contributing money for your campaign then there is a demand for your product in the market, if you are not receiving much contributions and you fail to reach your goal it could mean that your product is not what the market is looking for.
When you start raising money, you will attract many people from many different backgrounds asking you questions about the product. It will be a great opportunity for you to connect with them and grow your network.
People will start giving you feedbacks on your product when you are raising money. It is an another way to crowdsource ideas.
When you successfully reach your funding goal and deliver what you promised, your personal credibility will grow in the market. It will also increase your confidence.
Last but not the least, the other benefit of crowdfunding is money. Most of the people mistake money as a primary advantage of crowdfunding, just because the name itself has fund in it. It is not 100% true and not false either. It is like an icing on the cake.
Backers
The backers are a very important entity in a crowdfunding ecosystem. They decide which campaign to turn into reality. The advantage for a backer is different depending upon the 4 different crowdfunding types.
In a reward based mode, you will either get something for the exchange of your contribution or the product/service itself.
In donation based mode, you will generally receive nothing but self satisfaction.
In equity based mode, you will receive the equity of the company.
In debt based mode, you will receive interests in your contribution.
The most common benefit in all the mode is that you get to participate in an idea before it becomes a reality,before it becomes something bigger.
