Types of Financing and Sources of Funding
3. Equity Financing
3.10. Crowd Funding
Crowdfunding is a form of fundraising that involves a large community of people who contribute to a project or business. This is usually done through an online platform and usually involves rewards or incentives for contributors. Other options are lending-based crowdfunding, equity-based crowdfunding or donation-based crowdfunding. Crowdfunding is a great way for startups to raise funds without having to go through traditional venture capital firms. Through crowdfunding, entrepreneurs can reach a larger group of investors, often at a lower cost than venture capital firms. Funds raised through crowdfunding can be used to finance product development, marketing, hiring, and other business needs.
Crowdfunding platforms:
- Kickstarter
- Startnext
- Conda
- Indiegogo
- Visionbakery
- Companisto
- StartinFOOD (partner of Sartnext)
Crowdfunding is also a good opportunity to test the market for your product or business idea. Are people willing and ready to trust and support your idea? You can start growing your network and customer base through successfully communicating with your target group during the crowdfunding phase. Use your network to get the message spread as widely as possible.