Long gone are the days when an entrepreneur cannot work on his dream project due to lack of capital. With the advent of crowdfunding, money can be sourced from the netizens who believe that the proposed project has the potential to succeed. Though the concept of the crowdfunding dated back to the seventeenth century, it started to gain popularity after the launch of ArtistShare in 2003.
The crowdfunding model is simple to understand. In this method, a small amount of money is raised as a donation or investment from a large number of people typically through the internet to fund a project. The conceptual structure of the crowdfunding has matured further in the past few years and developed many branches based on the underlying interest of the contributor such as equity-based crowdfunding, reward-based crowdfunding, and debt-based crowdfunding. However, it will be wrong to assume that money can be raised through crowdfunding only for profitable projects. There are many examples where hefty amounts of money were raised through crowdfunding for projects aimed at purely social and environmental causes.
Steps to start a crowdfunding campaign
Starting a crowdfunding project is very simple. You can launch a crowdfunding campaign simply by following five steps.
- Project selection- you need to select the project for which you want to raise money through the crowdfunding campaign.
- Prepare estimated Budget and set funding target- After selecting the project, you need to estimate the budgeted expenditure for successful execution of the project, and you will have to set the target fund accordingly at the time of raising finance in crowdfunding mode.
- Marketing Pitch- You need to prepare a very detailed and attractive video or article explaining the prospective investor about the projects and the outcome that will be attained on successful completion of the project.
- Select crowdfunding platform- After completion of the above three steps, it is time to launch your crowdfunding campaign. There are many trustworthy crowdfunding websites on the internet where you can start your campaign. we have listed down below a few popular crowdfunding platforms.
- Start the campaign- Before starting the crowdfunding campaign, proper advertisement campaign in the media needs to be conducted to get people aware of the crowdfunding campaign and the page where they can donate money.
Crowdfunding platforms in India
In developing countries like India, crowdfunding has become one of the major sources of raising capital to finance start-up business ideas. The crowdfunding ecosystem can be disruptive to the highly regulated equity market and facilitate the free flow of capital across the border. On the other hand, crowdfunding can become an effective scrubber to wipe away the blot caused by poverty and malnutrition from the face of humanity. Though crowdfunding model is fairly popular in western countries like America and UK, it is recently got momentum in India. In India, a handful of companies have been established to support the crowdfunding ideology.
Milaap is the most well-known Crowdfunding site in India. You can raise money online for different purposes ranging from business to charities with Milaap. It deputes a manager who will help you through effective guidance to utilize every available option for driving your battle effectively. Its platform charge is beginning at 5%.
This crowdfunding platform started in 2012, and it is a standout among the others. It is prevalent among innovative craftsman. It is a reward-based crowdfunding site, where the contributors get rewards liked with the task. Posting your crowdfunding project on this crowdfunding platform costs Rs.3999. Wishberry deducts 10% platform fee upon withdrawal of fund.
Ketto is a Mumbai based crowdfunding platform established in 2012 which raises money for NGOs, non-profit entity and is utilized to help to flourish innovative ideas and also social causes. Its platform charges are 6% while the forthright charge for setting up a crowdfunding campaign is over Rs. 2000.
BitGiving is another one which raises assets for different causes quite similar to the above crowdfunding platforms in India. It is totally free to start a campaign with BitGiving. It also allows you to Post narratives about your involvement with crowdfunding and shares other’s experience in this also. The stage charge differs between 6-10%.
FuelADream is a crowdfunding site for individuals who intend to raise money for inventive projects, causes, foundations, occasions, and network driven exercises. They’ve effectively raised funds for projects like electric bicycles. It costs Rs. 3000 to begin a campaign, and 9% of the assets raised would be the platform charges.
ImpactGuru is an endeavor which was hatched in Harvard’s Innovation Lab’s Venture Initiation Program in the USA. It began in 2014, and it is utilized to subsidize different causes. You should simply pay the stage expense of 5%.
Catapooolt is a group commitment stage chiefly to help Music, Arts, Movies and other mechanically upheld ventures. It is an association situated in Mumbai. It started in 2012. This stage charges Rs. 1499 as a forthright expense and an extra 10% of aggregate finances raised.
Disadvantages of crowdfunding
Crowdfunding seems a very lucrative mode to raise finance for various projects and causes but it is not free from some limitations. Here we summed up some disadvantages of crowdfunding.
- Every project that applies to the Crowdfunding platforms does not get approved.
- A significant amount of background works needs to be done before launching the project to augment interest among the prospective contributor.
- If a campaign fails to reach its target amount then any finance that has been pledged will usually be returned to the contributor.
- If the project fails, it may damage the reputation of your business or organization.
- if the business idea for which a crowdfunding campaign initiated is not protected by a patent or copyright, someone may see it on a crowdfunding site and steal the concept.
- Some crowdfunding platform charges a fixed amount for starting a campaign on their platform and they also deduct a certain percentage on withdrawal of funds.