Crowdfunding Involves Raising Money †Free Samples to Students

Question: Discuss about the Crowdfunding Involves Raising Money. Answer: Introduction Crowdfunding involves raising money for a business idea or the business through using social media platforms and the internet to reach out to people (Micic, 2015). The donations are made through the online platforms. An entrepreneur evaluating if crowdfunding is the right way to raise capital should consider this positives and negatives of crowdfunding. Crowdfunding offers fast access to the funds raised. The campaign usually lasts for a maximum of 90 days, meaning, there is less pitching, negotiating and prospecting as it is the case in the traditional system. There are no upfront fees paid, and no equity is needed. In its place, you place an offer for investors through reward-based incentives. It is difficult for a new business to find customers. However, crowdfunding helps to establish a customer base for the business (Ennico 2016). Investors involved in offering capital create a reasonable basis for the market. Due to the large number, crowdfunding reaches to; there is the possibility of attracting more customers as well as engage with potential clients. Crowdfunding is an essential aspect in evaluating how the public reacts to your business idea. Finding investors who are interested in investing, is a good sign that the idea will do well in the market. This reduces the risk of introducing the product in the market for the first time. Crowdfunding helps to sell the concept of your business idea to other people apart from getting funds. Capturing the interest of investors to contribute to the funds, will help to develop a positioning strategy in the market to get new customers. In crowdfunding, the entrepreneur has the full control of how to reward the investors after receiving full funding. The amount of interest to offer investors is up to the entrepreneur unlike in traditional means where the bank decides on the amount of interest accrued. Running a crowdfunding campaign has certain shortcomings, and it might not be the right idea. Some of the drawbacks include Crowdfunding requires prior preparations for about three months to get the campaign running. It takes about a minimum of 15 hours weekly to prepare for the campaign. Time and money are needed to prepare customers, get investors and publish the project before setting up the campaign to raise funds (Green 2014). Failing to hit the target might mean a failed campaign. Crowdfunding is not viable for a business idea that requires a significant amount of money. The projects funded through crowdfunding require a capital of less than $100,000. A business idea attracting more than that may require other sources of funding. In the case of failure to achieve the set target in the campaign, crowdfunding leads to the loss of funds, back to the investor and nothing goes to the business (Steinbeirg 2012). Failure of crowdfunding is likely to damage the reputation of the business as well as lose the trust of the investors. References Ennico, C. R. (2016)The crowdfunding handbook raise money for your small business or start-up with equity funding portals. New York, NY, AMACOM. Retrieved from https://search.ebscohost.com/login.aspx?direct=truescope=sitedb=nlebkdb=nlabkAN=795578 (Accessed April 13 208). Green, C. H. (2014)Banker's guide to new small business finance, + website: venture deals, crowdfunding, private equity, and technology. Retrieved from https://www.bloomberglaw.com/browser/105.518456 (Accessed April 13 208). Micic, I. (2015) Crowdfunding: an overview of the industry, regulation, and role of crowdfunding in the venture startup. Retrieved from https://search.ebscohost.com/login.aspx?direct=truescope=sitedb=nlebkdb=nlabkAN=1006996 (Accessed April 13 208). Steinbeirg, D. (2012) The Kickstarter Handbook: real-life crowdfunding success stories. Philadelphia, Quirk Books