An Innovative Way to Fund Your Idea
The recent rise in popularity of crowdfunding revolutionized the way businesses can be funded. It is called the future of investing by many, as individuals are attracted by its accessibility. It shows that regular people are willing to invest but need an instrument to do so - crowdfunding is just that.
People who invest can expect returns as well as to support local businesses and entrepreneurs.
Crowdfunding brings a positive effect to the market, mainly - it is highly attractive to the general public. This way, regular people have more opportunities to support businesses and make a profit. It is important to know, that crowdfunding is equity-based. Just like in traditional IPO’s, investors receive shares in the companies they pledge towards. Crowdfunding is usually used by companies that are established, but need more capital for expansion, new product development.
Acquiring crowdfunding is possible with an ICO too. While IPO’s reward shares in a company, ICO’s offer intangible coins in the cryptocurrency and blockchain industries. These infancy-staged innovations, however, lack regulation and are a medium for fraud and scammers. But the cryptocurrency market should evolve with time, just like bitcoin did. In order to be more reliable, the changes should provide better security, reliability and transparency. More regulations should be applied to protect investors and minimize ongoing scams. It should continue to be a competitive space to drive the necessity for well-built projects. Great projects are available but need to be sorted out from the many fraudulent ones that clog up the space.
Crowdfunding can be used in two other ways. First one being - donations. Funds are gathered without the investors receiving anything in return. Most projects on donation-based platforms are for those in need. There are also platforms, which are reward-based (e.g. Kickstarter). Gifts/products are offered for investments and their value increases along the donation.
Crowdfunding is a great alternative to traditional funding - it reaches masses of people at once. It makes it easier for regular people to invest. However, crowdfunding is not the easy way out and does require some research and competence.
Risk warning: I am NOT a financial advisor. This post is NOT financial advice. Not all financial products are suitable for all investors. Any kind of investments carries risks to your capital.