The Introduction

INTRODUCTION

            “Crowdfunding” can be defined as a method of raising funds and capital through the collective effort of family, friends, colleagues, customers or even individual’s. It is more or less of a collective effort of a vast group of various individuals. Crowdfunding maybe done through online transactions via social media and by using crowdfunding platforms this is further influenced by networking to obtain a wider network in order to collect funds. (Crowdfunding Guide, n.d.)   

There are various benefits surfaced through any crowdfunding project. Even though funding is often the main aim it also is a perfect opportunity to obtain visibility as well as develop your customer base. Supplementary benefits gained through crowdfunding projects include, traction, marketing, social proof, good coverage via the press as well as potential investor interest.

When involved in crowdfunding projects it is normal to generate power (traction) for the commencement of the project. Power could come in the form of pre orders, backers of a certain product or service as a start-up offer. This further would catch the attention of the media which would give the project more publicity. Therefore generating a sufficient amount of traction is important for investor pitching.

Initial traction enhanced in crowdfunding projects would give appropriate marketing coverage for the project. By engaging supporters and thus growing your customer base, the marketing campaign would be doubled and enriched. Adequate marketing would help catch the attention of the press and media and include cover features of the organisation in print as well as newstations. Having the right amount of press coverage will be an eye catcher for the campaign and create good brand awareness for the start-up of the project.   Further it would help in expanding the customer base by getting new customers interested in the project.

Once proper marketing is done through good social media coverage and potential customers show interest on the project this becomes the beginning of social proof. Further this stresses on the fact that many people have shown interest in the project undertaken by the organisation. It is very evident that many investors have a keen interest in ambitious entrepreneurs whose ideas and perspectives can bring about good change to the world, for example such as good crowdfunding projects that would help the society as a whole. (The Benifits of Crowdfunding, n.d.)

Crowdfunding is different to the approach used in financing a new start up business. The platform used in crowdfunding first requires the entrepreneur to a build a single platform to showcase and share the resources with potential investors as to why funding is needed for a project. It is first essential to create a good network and view the potential investors. This requires the time, effort and money by the entrepreneur himself.