Crowdfunding has gained a lot of popularity since it’s discovery back in 1997.
Back then, crowdfunding wasn’t as developed and flexible as ti is today.
That said, in 1997, the British rock band Marillon, managed to organize their reunion tour through online donation by the fans.
After that, crowdfunding as a concept moved in every direction helping finance projects from video game development to startup launches.
Today, this method of obtaining capital for projects connects all kinds of people with all kinds of investors and there’s pretty much nothing that cannot be crowdfunded if the pitch is right.
A good example of this are agriculture crowdfunding platforms that help farmers develop their project through financial aid of investors who get either equity or ROI for their contribution to the project.
The fact of the matter is that crowdfunding is much more feasible as a financing method than other methods with a bit too many strings attached like venture capital and loans.
With all that being said, let’s examine the advantages of crowdfunding as method of financing various projects and business endeavors.
How does crowdfunding work, exactly?
As its name suggests, crowdfunding leverages the power of the crowd to make donation for a certain project whether that may be a new business product, a business itself or something entirely different.
The way it works is that whoever needs funds, pitches their idea on a crowdfunding platform.
The “crowd”, which can be anyone form investors to average people can, therefore, donate funds to help rise funds for the project.
Whoever pitches the idea must set an amount they need for the project and the tile limit by which the funds need to be gathered.
Depending on the platform, some may take a fee for letting you “advertise” your idea on their platforms, while others take fees from donations.
In other words, instead of pitching your idea to one investor who may or may not be interested, crowdfunding gives you access to a pool investors who are already interested in projects similar to yours.
Therefore, you have much higher chances of securing capital for your idea than through other means of finances.
Breaking barriers to financial support
As mentioned before, crowdfunding gives your access to a lot of potential investors, which is a great advantage over other means.
Crowdfunding investors look at the project itself and the idea behind it. Based on that alone, they may donate a bit or more to give you that little push you so desperately need.
Banks, on the other hand, will look for collateral, your credit score and other things to determine your creditworthiness and whether or not you’re a liability to them.
Similarly, venture capitalists or angel investors will look into financial projections, market demand and many other factors that will help them decide whether to aid you financially or not.
The crowd in crowdfunding doesn’t need any of that.
If a thousand people donates $10 each, you may already have the capital you need for your project.
There’s no need for one person from the crowd to finance everything, unless they want to, of course.
In that case, an investor will contact you with terms for their support that you can accept or not, depending on the contentions and circumstances.
More flexibility for financing options
The fact of the matter is that crowdfunding has become so popular, that today you can find a platform for just about anything.
Agriculture platforms are just one of many different ones out there.
In other words, you can look for the best platform with best conditions for your project.
Not only that but you can pitch your idea on several platforms at once.
Not only does this help you get then necessary fund but it also helps you get those funds much faster than it would normally take through other means.
If you set a crowdfunding time limit to one month, for example, you may get all the funds before that limit expires.
Remember, the more interesting your idea is, the more people will donate and donations will come much faster as people want to see your project realized.
To compare things, it would take you a month just to collect all the paperwork required to apply for a loan at the bank.
And it would probably take just as much time for a bank to review your application before they approve or deny you for a loan.
This is why so many entrepreneurs and solopreneurs consider alternative financing methods like crowdfunding before they resort to more traditional means like loans.
Closing Words
Crowdfunding is an excellent way to get the funds you need and on time to finance your project.
After all, there are a lot of investors who are look at interesting projects with a great potential.
At the same time, there are a lot of people who are willing to donate to see your project come to life in return for a few perks, which is nothing compared to the strings attached to some other financing methods.