Do you sometimes feel like you need a little extra oomph in your marketing efforts? Or maybe you just want to share your story with an even larger audience. Well, partnering with others through affiliate marketing is the right way to go to achieve greater impact while heightening awareness for your organization, enterprise or joint venture. Additionally, if you want to increase your opportunities to raise working capital, then crowdfunding has proven tremendously successful. Let’s unpack it to see if its something you can leverage in your business toolbox.
Never Miss Another Post
What is Crowdfunding?
One of the recent trends in business financing is crowdfunding. Crowdfunding is the practice of financing a project or venture by raising monetary contributions from a large number of people, typically via the Internet. According to Fundable.com, crowdfunding has raised $3.2 billion for over one million startups. Popular crowdfunding websites include Kickstarter, GoFundMe and Indiegogo.
Primary Types of Crowdfunding
The two primary crowdfunding types for businesses are reward-based and equity-based. Reward-based crowdfunding allows entrepreneurs to exchange a product or service for contributions to the business venture. In this type of arrangement, the business does not incur any debt or sacrifice equity or shares of stock. With equity-based crowdfunding, the supporter receives shares of a company in exchange for the funds pledged. Contributors become part owners of the company.
Crowdfunding can replace the need for specialized grant applications or other more formal and traditional fundraising techniques. Success with crowdfunding requires the organization to do its homework. The product or idea should be thoroughly tested and refined long before the funding campaign is launched.
What is the Right Choice for Your Organization?
Given all of the options for raising capital, is crowdfunding the right choice for your organization? It is important to consider the pros and cons of this type of financing.
Pros to Crowdfunding include:
· It is a means to raise capital quickly without upfront fees.
· It is a way to market your business and gain exposure.
· It introduces potential loyal customers to the business.
· It is a good way to do test marketing for product acceptance and receive feedback.
· It provides another option for businesses that have struggled to obtain traditional funding.
Successful campaigns boost public engagement, involving everyday people in the operation of businesses and organizations. However, there are some potential problems with crowdfunding.
Cons of crowdfunding include:
· Any funds that have been pledged will usually be returned to investors if the funding target is not met.
· Failed projects risk damage to the reputation of the organization and people who have pledged money.
· Getting the rewards or returns wrong can mean giving away too much of the business to investors.
Through crowdfunding, organizations and entrepreneurs harness the power of mass collaboration to build future success. Under the right circumstances, crowdfunding can be a viable option for an organization to raise capital for future growth.
Point of Clarity Quote:
“Strategic partnership is based on a shared set of values.”
-Benigno Aquino III