Whether it is via an equity platform or kickstarter, startups which have launched platforms show how effective it can be to raise funds through small contributions from many people. As crowdfunding continues to become popular, small businesses will start to take advantage of the trends that emerge. These are the three trends that you should watch out for 2015.
Crowdfunding will go mainstream. In the past years, crowdfunding as a way of financing business was novelty as a rare exception to borrowing money or getting a loan from the bank. It is now common for one to announce their crowdfunding campaign.
The CEO of WePay said that a lot of new organizations are now highlighting campaigns that are noteworthy. WePay is a payment service provider for marketplaces, crowdfunding and small businesses platforms. This is not just ideal for the campaigns as it normalizes the behavior and also leads to more people giving funds to crowdfunding campaigns.
Non profits are going to gain a lot from crowdfunding. The charity and nonprofit sector has mainly gained from the growth of crowdfunding.
Chairities are now seeing a twofold benefit from crowdfunding. It has been proven to be an extremely efficient way for one to ask for donations and also manage it compared with other methods. The additional social and viral potentials of these campaigns can give smaller charities a cost effective way of creating awareness for their cause.
In the year 2012, Congress passed the Jumpstart Our Business Startups Act in order to bring equity crowdfunding to the forefront. There is a federal exemption under the Jobs Act being stalled which means that real nationwide crowdfunding is not possible. Nearly a dozen states have now adopted their own regulations for business crowdfunding.
These funding have had a lot of success in raising funds for things such as real estate projects more so for construction and rehabilitation financing in projects where getting a bank loan would not be easy.Gus who is a lawyer with Gunster law firm said that unless you are in a state with these crowdfunding rules, you cannot take full advantage of the proposed federal benefits of equity crowdfunding.
Websites such as GoFundMe and Kickstater are not really equity financing websites. You will be preselling products and once the company is in operation, people who contributed are going to get the product. They are however not buying shares into the company.
If you want to launch a crowdfunding campaign in New Year, you need to go through the fine print of the platform or website that you want to use. Not all crowdfunding are created in the same manner and before launching the campaign, it is vital to know the ins and outs of every platform before creating your account.You truly need to understand the platform you are selecting. There are a lot of options such as Kicstarter, Indiegogo, Angellist among others. Chances are that there is one better than the rest for your startup.
You will also be required to have a marketing plan to get your campaign off the ground. You might have a really good idea that people would be willing to fund but unless they know about it, you will never see a dime of their money. Crowdfunding is not an easy marketing exercise hence the need to have a well executed plan in order to raise capital that you need.
Find out how much people are supposed to give in order for you to reach your goal then come up with a plan that will help you to reach many people. Make sure you know early champions. These are people who can use their network to help you reach your goal. Reach out to blogs and media outlets to help your campaign get distributed.
Campaigns that fail are those that do not have their business plan fully backed before they launch. While crowdfunding will not fully replace traditional funding alternatives, small businesses will continue to benefit from this method of raising funds.
Crowdfunding is here to stay. Crowdfunding is going to grow a lot as a means of financing non tech businesses which have been financed by family, friends or bank loans. The opportunity here is a lot and crowdfunding has not even been scratched on the surface of small business financing opportunity!