13 Things to Know About the Crowdfunding Business Model

13 Things to Know About the Crowdfunding Business Model

Have You Considered the Benefits of Crowdfunding?

Crowdfunding has made news as of late because of its many success. Topping that list in funding campaigns is the almost 70,000 people who have funded a Veronica Mars movie project to the tune of almost $5 million. As a group of people who can pool their resources together, many financial projects can get accomplished with the donation of many for very little actual individual cost. Bookstores have been saved by raising $100,000 online, which begs a very important question: could your project or business benefit from crowdfunding?

It’s Turning Capital Funding Upside Down

In the past, in order to get the funding for a business idea, you would have to create the concept, marketing the concept, identify any issues with it, and then hope that someone would fund the concept enough in order to help you recoup all of your initial investments. With crowdfunding, you simply need a big idea. You’re able to tell a lot of investors all at once what this idea is. Then those investors can decide whether or not your big idea really is something great. It literally takes no money right now to test how good a concept is – it simply takes the effort of marketing an idea to a crowdfunding site. For this reason, amongst others, the U.S. Small Business Administration calls crowdfunding a legitimate source of revenue.

Crowdfunding Has Raised Billions of Dollars

In 2011, crowdfunding raised $1.5 billion in capital for businesses, projects, and ideas. In 2012, the amount raised increased to $2.8 billion. Given that percentage of increase, in 2013, if similar results are achieved, crowdfunding could raise almost $5 billion for worldwide projects. The best part is that in many locations in the world, it doesn’t take much money to create a huge impact. What could $3,000 do for you right now? For that same amount, an entrepreneur in Africa could start a business, purchase all of their inventory, hire a staff member, and have enough capital left over to operate for a full year without selling anything at all. That’s the power of modern crowdfunding.

You Can Raise Up to $1 Million… Right Now

Under the JOBS act, entrepreneurs are allowed to raise capital of up to $1 million through crowdfunding, with unaccredited investors allowed to contribute up to $2,000 of their own money through the process. There are literally dozens of success stories out there, from independent musicians who financed their own album to businesses that gained the startup capital they needed to secure their own physical location. With little cost, almost zero risk, and a huge reward available for a great idea, crowdfunding is only going to get bigger and bigger with every passing year. How could crowdfunding help your business or idea get off the ground today?

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