Crowdfunding is an alternative financing method based on collective collaboration carried out by people who make a network to get money or other resources, the Internet is usually used to finance projects and initiatives of other people or organizations in exchange for rewards in innovative products., shares in future companies or interests paid by the entrepreneur.

Benefits of Crowdfunding

This system can offer small companies and entrepreneurs an opportunity to develop and finalize a project by allowing them to establish direct contact with collaborators.

Any individual investor can contribute to the financing of the projects, since the minimum investment is usually very modest. The secret is that thousands of individuals support these initiatives, managing to raise the desired money.

It is not always easy to get the bank to grant you a loan for a significant amount. You can borrow money from your friends and family, but it is not always the best way to do it due to the high commitment involved and the possibility of the project failing.

Crowdfunding helps your initiative to have enough money to carry out your plans, without the risk of ending up with financial problems if your project fails.

In addition, crowdfunding allows you to channel potential investors.  Instead of duplicating your efforts, you will have your entire initiative presented online in a much more accessible format, saving you loads of time and money.

There are several types of collective financing or crowdfunding.

– Reward crowdfunding, is the most popular, in which people finance in exchange for something.

– Donation crowdfunding, where there is no reward, but the satisfaction and commitment to carry out the project

– Investment or equity crowdfunding, where collaborators become co-owners of your company by exchanging capital for shares.  As share owners, employees are financially rewarded for their investment and ultimately receive a portion of the profits in the form of a dividend or distribution.

How to do it?

To start a crowdfunding campaign, you have to choose a specific product or service, people prefer to donate money for tangible concepts, instead of vague or unspecified ideas.

Next, target your campaign to a community. Your campaign is connected to collaborators who will later become your customers. They have to want your product or service, so you have to offer something that doesn't exist anywhere else.

If you don't have a community to target your crowdfunding campaign, it will be impossible to raise the money.

After developing your big idea with a specific audience in mind, you'll need to choose a platform for your campaign. This is not an easy task, as there are many options and each of them has its own rules. Some platforms allow you to keep all the money you raise, while others only let you access the amount raised if you reach your goal number. Certain platforms are dedicated to creative projects and business ideas, while others are more suitable for presenting initiatives by entrepreneurs.

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