Question

To be particular crowdfunding can be of both the ways. Crowd funding is both equity as well as debt. But it depends on the term you wish to raise the money. If you wish to raise the money for a long-term the you've to sell your share of the company to the crowd who pays the money and there will be no possible obligation that the money is paid back, they can get their money through selling such shares only. Whereas debt crowdfunding can be described as the crowdfunding where the term is usually short as in the case of a bank loan and this is also called as peer to peer crowdfunding. This can be compared to a traditional type of any bank or financial loan. This can be simply explained that in case of a bank loan you get money from only one institution, bank or one lender, whereas with P2P lending, you get money not from one but from many lenders (from the crowd in short). You'll have the same obligations such as paying the interest rates, redeeming the amount within a specified time etc. as they would be for a debt. And now coming to the pros and cons section, we have a lot to discuss, but I'll limit them to the main points. The advantages for crowdfunding include: It also serves as marketing for the product or the company If the crowdfunding is completed successfully it can get a lot of publicity through social media and sometimes even the funding may be over pooled. It can server as an inspiration for other business enthusiasts for raising money Most of the customers are gained from crowdfunding only, in other terms those who fund the product or the company through crowdfunding become the customers of the company. Funding can be made immediately if it has the possible reach to many Coming to the disadvantages: If a company has lack of proper planning and co-ordination the there is possible risk of getting crowdfunding failed If an organization has only limited reach, then they cannot achieve the target of crowdfunding. Crowdfunding may prone to the issue of getting the ideas copied by other competitors Sometimes crowdfunding may not achieve the required money even after the eligible time being invested and it may demand the money giving back to the investors.

Could crowdfunding be possibly in your future? If so, in which way, as debt or equity? Why would it or why would it not work for you?

Answer 1

Yes, crowdfunding will definitely be there in future, in my view crowdfunding has a great future. Ever since taking loans from banks has become more and more difficult, startups began crowdfunding. Put simply, crowdfunding is a method for raising money for your business or idea with the collective efforts of other individuals. They can be your family, friends or just about anyone who is willing to back your project in return for a piece of the pie. You can feature an end product, service or even a simple "thank you," depending on the amount of money pledged. You as the campaign creator are the deciding factor. Recently, The World Bank Group predicted that global investment in crowdfunding will hit $93 billion by 2025. That’s more any other traditional fundraising method for startups. I also think that large corporations is actively looking to incorporate the social ritual, and monetize the process. RocketHub has already been approached, and had a series of conversations with top advertising firms, universities, and government agencies (the U.S. Department of State, and the White House), about working together. The marketing budgets that large organizations bring to bear will continue the trend, fully popularize the ritual, and complete crowdfunding’s shift from “innovative maker tool” to an acceptable and exciting way to buy things.

I certainly expect that equity crowdfunding has the chance to be a major part of business. I really envision a world where funding is democratized and passionate people around the world are empowered to bring their dreams to life with the help of like-minded individuals. The pending change in regulations to allow equity crowdfunding will certainly expand opportunities for people within the United States.

Crowdfunding will work for me also, as I think it is great way for some passionate people to come together and fund an idea which they all truly believe in. To use crowdfunding this way yourself, you’ll need a minimum viable product (MVP) concept - that is; enough of a fleshed-out idea and unique selling proposition (USP) to get crowdfunding buyers interested. Certainly, brands that have launched past products through these channels will have an advantage, but even new companies can launch in this way. You will need to invest in some marketing and branding to ensure your campaign looks legit, but if done well, this small investment will still save you serious money over what it’d cost you to conduct a formal product launch.