Still do not know what crowdfunding is and how could this financing system help to create your company ? You can rest assured, because you are still in time to implement it already in your financial capture strategy.
Crowdfunding, also known as crowdfunding or collective financing , is an excellent alternative for those who have a project, whatever the scope, and who seek financing to carry it out.
This system of patronage is given through designated platforms. The objective is to raise funds so that some people (thousands of people actually) enter as investors and finance the published projects through small amounts of money .
The total to finance is distributed in small amounts that are established in a hierarchical manner, depending on the strategy of the entrepreneur: € 10, € 100, € 1000, etc.
You may think that only those projects that return the borrowed money will obtain financing. However, in most cases, the “prize” for providing a small amount of money for investors is a free sample of the product, a reminder or even a shirt!
Crowdfunding has its fundamental principle in the concept of donations and patronage .
If we look back and make a brief review of history, since 1989 we already have testimonies of success stories of musical groups that have financed their projects as records and tours through this system.
Given this success achieved by the bands Extremoduro and Marillion with these campaigns in 1989 to finance a record and in 1997 to finance a tour. Other industries such as cinema joined in 2004 when a French company obtained financing of more than 60 thousand euros for filming .
Likewise, there have been other famous cases in the history of cinema and literature, in which this type of financing has also been achieved by raising important funds. In this way it was possible to carry out events, business, publication of books and thousands of other causes and projects that have managed to get ahead thanks to donations in patronage.
How does Crowdfunding work?
Being one of the beneficiaries of crowdfunding is simple. It all starts with an idea, once you have in mind the idea of your project the ideal is to look for a platform on the internet where you publish your idea.
At this point, you must complete certain information about your project to create your promotion campaign .Remember that the main thing is to sell your idea to the public so they want to be part of it and get financing.
Audiovisual platforms like Youtube, will help you to transfer through videos what is the objective of your business.
You can also offer some type of reward in exchange for funding , such as giving credits in a video clip, movie or on a disc. As we said before, it does not have to be an economic reward.
Next, you will enter the phase or period of funding in which all the people who access the page will have the opportunity to collaborate economically with your project .
After the deadline (usually 90 days) your project closes and you receive the money collected from which you must pay a small commission to the web platform.
Why should i invest Crowdfunding?
Many people who have obtained success in their businesses, or who want to invest their money in something, consider what to do. Some choose to be business angels , others to invest in a big way, and a few others wonder why not invest in crowdfunding?
Started as a private investment fund, now Envestio is a modern crowdinvesting platform, which offers new ways of making investments in traditional and innovative investment projects,You can Start investing with Envestio.
Types of crowdfunding
Broadly speaking we can differentiate four different types of patronage:
Equity Crowdfunding : Investors receive a stake in the company as shareholders. This type of investment can be very fruitful if the project grows, since the investment made can be multiplied.
Crowdfunding of donation : Aimed at projects with solidarity purposes. The participations are directed towards a charitable cause. Social companies use this type of financing a lot for their beginnings.
Loan Crowdfunding : also called crowdlending . Investors end up recovering their investment after a period of time plus a percentage of interest. Normally, the person requesting the money determines what interest the loan will have.
Reward Crowdfunding : Participants receive a tangible item or service in exchange for their money. Very used for artistic projects such as the creation of records, films or shorts. You can offer to appear in the credits, or the gift of the disc at the time it is published.