Crowdfunding has been here for some time and has proven its helpfulness in sorting out one of the biggest challenges for businesses, which is funding. Depending on the amount of money and the type of crowdfunding you decide, you may or may not repay those who invest in your campaign. Some of the examples of crowdfunding methods you can select from are highlighted below.
As indicated by the name, debt crowdfunding entails raising some cash, which will be repaid later just like a traditional loan. A good example of this type of loan is Kiva which is known for helping entrepreneurs mainly in developing countries and the US to raise money for different projects. The main advantage of this platform is that they are not too concerned with looking at factors that traditional lenders such as banks look into. They are not too concerned with credit history which is one of the key areas that banks are interested in or the risk which is presented by the type of business you are engaged in. Instead, their model is based on the amount you want to borrow. For instance, if you want more money, they will require you to be more qualified.
This is another type of crowdfunding that is different from the first one. As opposed to paying back the funds raised at a later date, this type involves rewarding individuals that backed the company with incentives. These incentives can be as small as tokens of appreciation, thank you cards and small tokens. It can also involve giving early access to products or services among other things. An example of such is Kickstarter which has helped in funding many businesses amounting to tens of millions of dollars. While this way is far better than the first one because there is no repayment, it raises the pressure in raising funds.
This method of funding requires you to give those who invest in your idea equity in your business as evident through the name. It is like looking for venture capital, but it is somehow easier if marketing is done correctly. An example of equity crowdfunding is Wefunder, a site that can be used by any business to obtain funding. Users can express the equity they are willing to give. The main drawback of this site is that only a few people are aware of it and therefore getting funds might become hard.
This is one of the best crowdfunding options that you can explore if you need funding for your business. Unlike the others, you are not required to repay the funds or give rewards to the funders or donors. Instead, it is based on donations. An example of this kind of funding is GoFundMe, a well-known crowdfunding platform that is strictly based on contributions. This platform allows an individual to post an appeal to potential donors which can be anything ranging from money for business or any other personal reason. GoFundMe is known for raising money for various causes which may be business or other purposes all over the world.