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Beginner’s Guide: Basics of Crowdfunding

What exactly is Crowdfunding?

The main idea behind Crowdfunding is raising money from multiple people in order to fund a small business venture.

How is it done?

Crowdfunding takes place on the Internet; this is done on social platforms i.e. websites, specifically created for the purpose. Some traditional Crowdfunding campaigns still take place in social gatherings.

You are provided with a platform to pitch your entrepreneurial venture or idea to an audience and if they find it worth their investment, they would definitely invest in it.

Types of Crowdfunding

There are two types of Crowdfunding:

  1. Equity-based Crowdfunding;
  2. Reward Based Crowdfunding.

And yes, anyone can crowdfund, but you need to go through a specific quality check to prove your idea’s viability.

What to keep in mind before you begin?

  • Be prepared with a business model that is ready to be crowdfunded. Don’t bring half-baked ideas to the table.
  • Research if you haven’t. Research more if you already have.
  • Be realistic about the target you keep in mind before you get started.
  • Make people share or tweet about your idea as much as possible.
  • Be straightforward. Your idea isn’t going to be presented in front of Investment bankers, instead ordinary people are going to listen to it.

What amount on average can be raised?

On average, $7000 is raised.

Can your campaign raise more than what you had in mind?

Well, most of the platforms help you raise more than your targeted amount. The target is pre-agreed.

What exactly is meant by your “campaign”?

Most platforms will ask you to create a “Home Page”, which would be having an image, along with your “introductory paragraph”.

A video would be preferred to explain your idea in detail, in a lesser amount of time. For making a video pitch, spend ample time looking around for what others have done and how they structure video pitches. This would give you a better understanding of what to put in and what to exclude.

You must make these elements in a manner so that they attract the viewer with its color schemes and simplicity. Remember, they are not here to sit and spend an hour or two, trying to understand your idea, so design your campaign accordingly. It would be perfect if it’s something catchy, and easier to retain in mind.

Let the viewer have an idea of your viability right from the beginning. Build trust right from the beginning. Give them an idea of what you want to raise through this campaign and what future prospects you would have.

Putting it all Together

Crowdfunding is a process that would help you raise money from people, who would like to invest after having an idea of what you are doing in your startup or business venture. The points we’ve mentioned are here to guide you a little, you can add as many factors as possible to present your idea in an awesome manner.

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─ April 16, 2016