Crowdfunding
Crowdfunding is a fast-growing form of crowdfunding business ideas worldwide. The point is that instead of a large financier (such as a bank or venture capital company), many "small investors" pool together the money to implement a new project.
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- + Even a single original business idea can be enough to obtain funding.
- + It provides much more flexible frameworks than traditional forms of financing.
- + By pre-selling the (not yet finished) product or service, the business can acquire customers who will neither be creditors nor co-owners of the company.
- + A successful crowdfunding campaign has serious news value, i.e. it offers significant communication opportunities.
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- - The "noise" is huge, a lot of ideas seeking funding appear on the big crowdfunding portals at the same time - so it's hard to stand out.
- - A professional (and expensive) communication campaign in English was necessary for almost every successful project.
- - Good communication doesn't solve everything either: a large proportion of crowdfunding campaigns end in failure.
- - Crowdfunding usually carries some tax risk: it is definitely worth finding out about the rules in effect in the country of the chosen form before preparing the campaign.
In order to finance a seemingly brilliant business idea from external sources, crowdfunding can also provide a solution instead of traditional ways (e.g. taking out a bank loan, business angel or venture capital).
The principle itself is not new, stock market companies also have countless small investors, for example. Thanks to digitization, crowdfunding can now be accessed by anyone via the Internet, directly reaching many unknown people worldwide who are receptive to the given business idea.
To facilitate this, i.e. to mediate between those looking for funds and investment opportunities, many crowdfunding portals operate today, directly connecting the dreamer of the business idea with potential financiers.
The relationship between them, that is, the legal title under which the interested party gives the money to the entrepreneur, can be of many kinds. The most common solution is to buy the product that has not yet been created in advance. In addition, there are sites that provide loan or even capital. All this sounds very simple, fast and cheap, but unfortunately it is not.
New business ideas are constantly appearing on these platforms, so it is difficult to capture the attention of potential financiers. It is very important that the idea or product is unique, novel and appropriately priced, so it is worth looking around crowdfunding sites in advance, getting to know the pricing practices of similar products. However, it is at least as important that a well-thought-out communication campaign is connected to fundraising.
Professional film and communication work is behind most successful campaigns, and to reach the international investor community, of course, everything must be prepared in English. The preparation and maintenance of the campaign can even involve significant costs. The costs of appearing on pages and blogs related to the topic and placing advertisements must be taken into account. Attention must also be paid to the coordinated use of various social media platforms.
In addition to raising funds and communication benefits, such a campaign has another significant benefit: a lot of people ask a lot of different questions about the business idea, the product or service that has already been developed. In this way, the company launching the campaign can get a lot of new opinions and information about the target market, which will be of inestimable value during the further development of the product.
Last edited: January 2, 2023