Need money for your startup? Then crowdfunding might be right for you.

Need money for your startup? Then crowdfunding might be right for you.

Soon after President Barak Obama’s JOBS Act became a law in 2012, many Americans began talking about crowdfunding. The principle of crowdfunding has been around for centuries. Asking others to support a cause by donating money is not a new concept. Although this seems like this would be considered charity, crowdfunding is in fact a separate entity – one in which large numbers of people give their money to projects or ventures, such as an entrepreneur, startup company or small business, and, in return, receive a small stake in the company. As each contribution is made, the company accumulates more and more “investors.” However, this method is not always the way in which crowdfunding is done. In some cases, a threshold approach is used. Other times, funding is conducted without the public receiving anything back from the company.

Crowdfunding is, for the most part, accomplished via the Internet. There are many designated websites for crowdfunding opportunities such as Kickstarter.com, StartSomeGood.com, Indiegogo.com and Rockethub.com. With this being said, is crowdfuding beneficial for your company? Like every issue, there are pros and cons.

The Pros

The whole process of crowdfunding is simple! By creating a profile on a crowdfunding website, your business is automatically positioned to receive financing. Another benefit of crowdfunding for entrepreneurs or startup companies with unconventional business proposals is that they don’t have to redefine their views to match those of accredited investors. It offers potential businesses the opportunity to keep their original ideas. It should be noted that the simplicity of today’s crowdfunding practices still require time and effort. It is important for entrepreneurs and startup companies to get their names out there, via social media, and to create a following of people who could potentially finance the company.

The Cons

The work required to gain the following un-simplifies things somewhat (not the process, just the workload). Since the main way crowdfunding is conducted today – over the Internet by means of using a threshold method – the process of gaining money and using it for a new venture isn’t as clear-cut as it seems. The entrepreneurs and startups that use crowdfunding are susceptible to having their ideas stolen by others, and they get no more funding (regardless if individuals keep giving) once their threshold has been met on a crowdfunding website.

For entrepreneurs, startup companies and small businesses, crowdfunding is a viable option for gaining funding. It could be just what your business needs.

Special Offer: Complimentary Consultation

Three Girls Media & Marketing Inc. is a public relations and social media management agency with teams in Silicon Valley and the Seattle area. We love working with small and emerging companies across the nation to raise their brand awareness and name recognition. We offer a complimentary 30-minute phone consultation with our CEO and can answer your questions and discuss your specific marketing needs.

Call 408-871-0377 or Contact us today to arrange yours!

 

Photo Credit: Tax Credits

Subscribe To Our E-Newsletter!

Want the latest marketing tips & tricks e from our team? Stay at the top of your marketing game and subscribe now!

Woo Hoo! You'll get your first marketing tips soon!