Financing a startup used to be a precarious task for entrepreneurs due to the amount of debt they would accrue just to get their project off the ground. The days of worrying about credit cards and bank managers, however, are gradually becoming a distant memory thanks to the rise of crowdfunding for startups.
Crowdfunding allows entrepreneurs to pitch a business plan via the web to prospective investors; these investors may be other entrepreneurs, bands of investors, or simply individuals looking to invest some disposable finance.
And crowdfunding for startups brings a wealth of benefits, so let’s take a look at why it’s a good opportunity for launching businesses.
Diverse Range of Investors
With public knowledge of crowdfunding receiving such a boost in popularity due to the rise of Kickstarter, many first-time investors are now heading online to investigate potentially lucrative investment opportunities.
This is in stark contrast to the old days of investment, where it was more common for a small number of investors to invest large amounts of capital into your business. This certainly cut down on the admin, but also exposed startups to substantial risks e.g. if an investor suddenly pulled their money.
With crowdfunding, however, the levels of investment per individual are much lower and present less financial risk to your overall targets.
The Internet Allows You to Pitch Online
Due to the lack of capital in the early stages of a startup it’s always advisable to keep operations as streamlined as possible. However, the need to physically get out into the world and meet investors has meant it’s difficult to achieve.
Thankfully, crowdfunding for startups cancels a lot of the legwork involved by bringing all pitches online. This is crucial for entrepreneurs who simply can’t afford to be in two places at once and also reduces the stress of preparing individual presentations.
Crowdfunding Brings Feedback
Running a startup can be a lonely business at first, but the beauty of crowdfunding is that it brings in a broad range of investors who all want to take your business to the next level. This provides an amazing sounding board to work on ideas and gather feedback from. And at the startup level this is invaluable to help guide your business through those hazardous early days.
Media Exposure is Enhanced
Previously, funding ventures failed to capture the public’s imagination as they were primarily conducted behind closed doors and far away from the public eye.
Crowdfunding, however, has become a unique phenomenon in that it can generate headlines very quickly if the media picks up on your vision. This, in turn, can then spread like wildfire across social media, raising your project’s profile even higher. It’s this publicity which can help you maximize the investment into your business with virtually no financial outlay.
And the benefits of this increased exposure aren’t just limited to the amount of investment your startup receives. It also brings in organic traffic to your brand and helps to raise your brand’s profile as well as bring potential customers into your conversion funnel.
We’ve shown that there are a myriad of benefits when it comes to crowdfunding for startups, so bearing this form of investment in mind should be a given for any startups.