Are you wondering what are the pros and cons of crowdfunding?
Crowdfunding can be a fantastic way to raise significant sums of money to get your startup or business idea off the ground and to the next level.
There are also some downsides which many first-timers overlook. Know the pros and cons and make an educated choice before you rush in or dismiss this as a fundraising option.
There are different forms of crowdfunding as seen in the picture below. Over this post, I will cover some of the pitfalls and some of the advantages of going either way.
The Pros Of Crowdfunding Capital For Your Business
1) Getting Right To The Investors
One of the biggest challenges in trying to raise startup capital is finding and connecting with investors. If you don’t already have a great database and strong relationships this can take a lot of time.
You can go back to business school for a couple of years and build a network. You can go out to every event possible and develop a network over time. You can try to apply to startup accelerator programs. Though they can be harder to get into than Harvard. You can tap your friends and family. Or you can get a fundraising consultant who already has all the connections and relationships you need.
This last option is similar to crowdfunding, where you can leverage an existing online platform, which already has a database of investor users. Put up your campaign and get right in front of a pool of active investors who are looking for opportunities to fund. You can shave months and years off of knocking on doors and flying across the country.
This was exactly the case when Obama signed the JOBS Act in 2012, allowing everyone to invest in startups as opposed to just accredited investors which only represent 1% of the US population.
2) Quick Proof Of Demand
Once all of your materials are ready you can launch your crowdfunding campaign online and pretty quickly see if you were right about the demand for your solution and your investment offering.
See How I Can Help You With Your Fundraising Efforts
- Fundraising Process : get guidance from A to Z.
- Materials : our team creates epic pitch decks and financial models
- Investor Access : connect with the right investors for your business and close them