What is crowdfunding?
Crowd = Mass
Funding = Financing
Imagine: you have a fantastic idea for your future company or a (dream)project. But you lack the money to realise your idea. How do you get the money to get started? Finding an investor isn't possible and the banks aren't giving you any loans. End of story? No!
For the past couple of years there has been an upcoming new type of financing, it is called: crowdfunding. Loosely translated: a group of people donates money in a (company-) concept.
Why would 'the crowd' invest? If someone gets financing from a bank or an investor, in the majority of cases, the (final) financial benefits which go to the bank or investor play a major role. At crowdfunding 'money' is usually not the reason to invest. It is mainly the goodwill toward the entrepreneur or promoter and the good feeling that the investor gets if he can contribute to an initiative he completely supports.
Who is your crowd? Often, friends, family and acquaintances are the beginning of your crowd. They get excited by your plans and want to help you in order to realize these plans. To get your crowd big enough, you will also need to attract people from outside your immediate network. In order to reach them, you usually have to work harder before they will be willing to invest in you. Sympathy and trust is of great importance here. If people are interested in your plans and want to invest, they then also keep up to date with progress and developments, for example via a blog or social media. They are often much more interested in your personal story than in any returns. And if your investors are (and remain) enthusiastic , chances are that they will persuade others to invest in your project.
How can others invest? Your crowd can invest in a number of ways:
- Donate: your crowd gives you money and gets nothing in return except a good feeling;
- Sponsors: you get a non-financial reward back, for example, a copy of the book you want to promote or name on your website;
- Loan: your crowd will get the loan amount back in time with interest;
- Participation: sharing with the crowd in the performance of the project.
For whom can crowdfunding be a solution? In all cases, crowdfunding can be a godsend: for (starting) entrepreneurs, creative projects, to realize art for social projects at home and / or abroad, for sports projects, community initiatives, writers, charities, musicians, journalists, photographers and so on. In short, too many to mention.