You might have heard or read about crowdfunding and you might have a basic idea of what it means and what are the types of crowdfunding, if you haven’t already, this will give you a better idea!
There is more to crowdfunding than just getting monies; crowdfunding can help you in several ways. Here you will read about few benefits of crowdfunding and how you can consider doing it if not considered already, because it’s fun and challenging at the same time. But, if done right there is nothing that can beat it.
Let's get into this...
Wouldn’t you get the best kick when you put your idea out there and a bunch of people like it and are ready to back you on your journey both morally and monetarily? That is exactly what happens in crowdfunding, when you put out your idea onto the world, you will quickly know if your idea is being liked and will people pay for it. If you fail you fail quickly, which is nice to readjust your idea to fit the market. There are few products that were a rage and people paid up loads of money to have it, one such example is Pebble Smartwatch that got a funding of ₹ 129,97,62,900 from 78400 people.
What great feeling it is to have your potential customers giving feedback - on the go and you can dynamically adjust your idea to cater to their requirements if need be, which will for sure raise the acceptance and make more people buy into your idea and fund you. Crowdfunding can be utilised as this feedback loop from your potential consumers.
Crowdfunding is not just about the monies, but, if you look at it more closely it's crowd+funding, so if someone likes your idea and they contribute monetarily for the same, they are in fact invested in your idea to succeed and they want to have this creation see the light of the day, so they double up as your PR, they will bring in their set of contacts onto the campaign, its multiplicity effect to say the least and in some cases it will be exponential like the Flow Hive project which made 17380% of the amount required or the Star Citizen video game which was overfunded by 450%, these numbers are a reflection of contributor PR via word of mouth and viral social sharing.
4. Risk Mitigation
The beauty of crowdfunding is this aspect, because the funding is done by not just one but hordes of people, because the denominations are next to short change (more often than not) and because the initial investment is very low, sometimes even zero, the risk is distributed among tens of hundreds of people. It is analogous to a tooth pick being weighed down by a block of cement. If there is only one pick standing and the cement block falls on it, it will break for sure, but if there are 100 tooth picks aligned in rows and the cement block falls on them, they sustain the impact and with very less breakages. Similarly, crowdfunding can help to dissipate risk in a better way.
5. Pre Sales and Customer Base
If it’s a product you are developing, you can raise capital to manufacture the finished product, and because you had crowdfunded the product you can give it back as a reward to the contributor, it’s a very good pre sales channel where you can develop the product and also sell it with minimal or zero investment from your end. However, the crowd should feel the need for your product. There is more to it than the sales, if the customer likes it he/she will refer their acquaintances to try it out and they will be proud to do so, because essentially they are the contributors for the product to get developed in the first place.
If you yearn for freedom of expression, if you yearn for creative freedom, then you can consider crowdfunding your next big idea for a film or short video or a music video and the like. This helps in two ways, one - you are not dependent on the whims of a single producer and his/her idiosyncrasies which will help you concentrate on your craft and two – your idea will be accepted and funded by the people that belong to your school of thought, who are essentially your viewers once the project goes live, they have the vested interest to make it a hit too, so they do some amount of marketing for it to reach farther than your singular reach.
Out of the many benefits of crowdfunding, these are the 6 impacting ones.
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