Why Crowdfunding Is the Smartest Way to Start a Company

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Securing the funds required to start a business can be difficult. Even if you’ve got a fantastic idea, investors aren’t too keen on just handing out money to anyone especially if you don’t have the credentials to back up your claims. Unfortunately, there’s no way around this unless you want to bank on luck, so for many people, it’s just a case of finding alternate methods of funding or subject yourself to the scrutiny of investors.

If you don’t want to throw yourself into the lion’s den, then the only way to go is crowdfunding. To put it simply, crowdfunding is a way of raising money for a project or business venture through monetary contributions by your intended consumers. For instance, if you plan to release a new type of smartphone that hasn’t been done yet and there are many interested customers, then they can crowdfund your project idea by giving you money, usually in exchange for something.

Crowdfunding

To give you a better idea of how to make crowdfunding work for you, here are a couple more things to consider and why crowdfunding is such a smart move.

It’s Convenient

Crowdfunding presents a convenient method of gauging interest for your future projects. If you’re not 100% sure if your ideas represent what the market wants, then there’s no harm done in trying to gather interest through social media and a crowdfunding project on a website like kickstarter.com. It’s a lot faster and more convenient than heading to investors and pitching an idea, and you don’t need to master the art of the 5-minute pitch either.

It Targets Your Core Audience

Crowdfunding projects that are spread through social media and the internet are far more likely to attract the attention people they are relevant to. If you’re trying to attract people that play video games, then your advertisements are likely going to spread through publications and blogs that are related to your product. With this in mind, it’s far less likely that your advertising budget will be wasted and you can get an accurate representation of how successful your product will be among your target audience.

There is Reduced Risk

The normal method of pitching your idea would involve a credit company such as smallbusinessloans.co or speaking to investors in order to get the funding. While it’s still completely valid (and often safer to take the traditional route) crowdfunding comes with less risk; at least, before you actually receive the funding. Once you do get the right funding, you’re expected to meet every single promise and goal that you set out. If you don’t, then you’re going to be met with a lot of negative criticism and people will start asking for refunds.

It Proves Your Concept

Lastly, crowdfunding ensures that your concept is solid. If there are people willing to fund your startup for you, then there’s a good chance that your product or services are in demand and you’ll have a head start at capitalising on that demand before other companies do.

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