Getting a loan from a bank to fund a business project is not always easy. Thankfully, there are many innovative solutions on the market to find the funds needed to launch your business idea. Among these, crowdfunding is the most convenient option…
How does it work?
Similar to fundraising, crowdfunding involves asking the general public to contribute to raising the money needed to set up a business. Aimed at individuals as well as associations and local authorities, this solution has become achievable thanks to the Internet. Indeed, any project owner will only have to go to a dedicated platform to find individuals ready to invest in their idea.
As a business owner, you will have to publish a description of your project on the website and then wait for a response from potential contributors. You will have to be careful with your presentation in order to convince as many people as possible and raise as much capital as possible. For your information, if you do not raise the amount of money needed to set up your project within a given timeframe, you will have to return the money already paid by the contributors.
Why choose crowdfunding?
By going for the crowdfunding option, you will be able to diversify your capital resources while exchanging with a large audience. You will be able to raise funds in a simpler way while expanding your community and target audience.You will also have the opportunity to test the feasibility of your idea, knowing that contributors never invest in a project that they do not validate.
If you do not manage to raise the amount of money announced, it means that some points will have to be modified: the concept, marketing strategy, presentation, financial plan, etc. You can then improve these features to get more moneyand thus better results.
Which crowdfunding solutions to choose?
The type of crowdfunding you choose usually depends on the nature of your project. If you want to fund the making of a documentary, a scientific research or the organization of an event, donations are the ideal solution. Also known as charitable crowdfunding, it allows you to obtain a donation with or without a counterpart.
For a participatory loan, contributors only borrow (with interest or free of charge) the amount from the project owner. This option is, however, highly regulated, since the platforms authorised to offer this service must be registered with spevcialized directories.
Participatory funding can also take the form of an investment in a start-up or SME. The remuneration of the contributor depends mainly on the conditions applied by the platform, which is why it is important to compare several crowdfunding websites in order to succeed in raising funds.