One of the biggest obstacles a startup can encounter is funding to bring a dream to reality. Entrepreneurs have traditionally spent an inordinate amount of time finding the financing they need to get a new business off the ground and as tech billionaire, Aubrey Chernick, knows, the availability of funding is vital to the success of a startup and crowdfunding offers that and so much more.
Traditional Methods of Funding Startups
While it is true that the Internet has been a huge help in raising funds to get a new company started, it was always necessary to produce a business plan and then personally seek out investors willing to sink money into a new business. Investors always saw this as risky because there was no way to tell with certainty whether or not a product could be manufactured well and if it would appeal to the masses. Quite often a meeting would be set up where the entrepreneur could pitch his or her idea, discuss potential revenue and then seek funds necessary to begin production.
Benefits of Crowdfunding in the 21st Century
Crowdfunding is a way in which entrepreneurs can outline their vision on a particular type of website that is set up to attract investors willing to ‘gamble’ on a newcomer. The purpose is the same as in seeking financial backing in the traditional way except it isn’t often necessary to meet with a potential investor in a physical location. It is also possible to reach tens of thousands of potential investors who can see a digital presentation, at any time of the day or night. This means that you can pitch your idea to an almost infinite number of people as opposed to speaking with bankers which limits the amount of financial backers you can reach. With billions of people online, funding possibilities are almost endless.
Benefits Well Beyond Funding
As more and more people view the crowdfunding page where you’ve detailed your product or service, you will gain rank in Google. This, believe it or not, helps to promote your brand long before your merchandise is ready to hit the market. Crowdfunding sites also gain the attention of other creatives who just might like to collaborate with you sharing ideas, talent and expertise. The possibilities are endless on a crowdfunding site and that’s why they are gaining in popularity with some of the world’s most prosperous business men and women always on the lookout for the next best thing in their industry.
Entrepreneurs are often said to be the dreamers of society. They have a vision and are able to conceive some of the most useful products or services but many are as poor as they are creative. Crowdfunding is a way to reach out to investors without spending a lot of time in the process. Continue working on your project while the Internet reaches out to investors, creatives and future customers. These are all reasons why crowdfunding is, in itself, perhaps the best tool an entrepreneur can learn to use.
Tarik Pierce is the founder of InvestorTrip.com and regularly contributes articles to this website.
While living overseas, he uses PureVPN for a low cost VPN service.
He recommends Bluehost for setting up your own personal and/or business blog.
While his background is mostly related to trading stocks, he recently gained interest in real estate crowdfunding with Fundrise.