The Rise of Crowdfunding

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advantages of crowdfunding

 

The next-generation of crowdfunding will allow inventors and investors to build innovative solutions by overcoming the problems of trust and financing. Young entrepreneurs with creative minds and skills will no longer hide their talent as they are turning more to the community to raise capital for their ideas.

Peer to peer lending is becoming a very important and attractive asset class. Business owners are forced to raise funds through bank loans and the financial institution which comes with a variety of challenges and is rarely accessible to startups or less established companies. However, the most technological advancements come from small teams and grassroots initiatives who proactively seek out venture capitalists and angel investors or seek alternative methods of funding. Many of potentially promising ideas and startups die in their first year not finding the right investors, and thus potentially groundbreaking ideas, technologies, and products are lost.

The concept of crowdfunding works as a marketing tool. Crowdfunding campaign is a good way to introduce the company’s overall mission, vision and concept to the market, as it is an easy way to reach numerous channels. By incorporating social media activities, videos & website links, this allows ventures to receive thousands of organic visits from unique users and potential funders.

It helps you gain loyal advocates. A crowdfunding campaign helps ventures gain potential brand advocates & early adopters. These are the people who believe in your idea or story enough to take a chance & fund it. They share your vision & could even help share your story on social networks.

There is also the growing trend of equity crowdfunding; the process where entrepreneurs receive funding from different investors. In return for providing the funds, investors receive equity or ownership shares of the company.

The World Bank estimates that equity crowdfunding will be worth $93 billion by 2025.  This is all due to the huge gap in the current market between entrepreneurs who are seeking funding and investors who have the cash to invest in businesses. Through crowdfunding, these entrepreneurs get access to a wider range of potential investors.

Whether you’re an established business looking to grow your business, or a brand-new startup, crowdfunding could be the perfect way to tell your story and connect with potential investors.

Ownership & Equity Crowdfunding allows one to keep ownership of their company without giving away substantial equity of the venture or project.

Since the last couple of years, the concept of crowdfunding has been rising to start using blockchain technology, allowing for a more seamless payment experience. Instead of requiring a credit card or debit card, a blockchain-based crowdfunding platform could support fiat payments as well as cryptocurrencies. A blockchain payment infrastructure is also inherently more secure, because you are not entering your sensitive financial information into a browser. The blockchain also opens up a new world of features that are not possible today

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