What is Crowdfunding?
To define the concept in simple terms, we say that crowdfunding is a funding system for business projects based on the collaboration of several financiers who donate their collective form to spice up the best business ideas network resources.
The base operating micro finance systems of collective or mass funding are to bring together a group of financiers that add little capital to finance various business, social or even political projects.
Its biggest advantage is that you can get funds for your pryoecto without the high costs and interests involved obtain credit through traditional financial institutions. And its main disadvantage is that you need a good business plan to sell your idea to the networks of donors to believe in her and the support granted.
The Internet and the impact of social networks has enabled collective donor communities not only grow but also safer because they have more information about the projects they wish to support.
To have an idea of growth, only in 2012 the funds raised under the crowdfunding model exceeded 2.7 billion dollars increasing by 81%.
“People with money who rely on people with ideas and work together to bring a project forward” – Javier Martin
How the system works Crowdfunding?
If you want to explore this option to finance your business idea you should understand the basics of how it works.
1. The Business Project: The first thing you have to have is an idea, a project and certainly a business plan. You must be very clear you want to do and how you’re going to do. Your idea must be feasible, useful, interesting and able to conquer the minds and hearts of the people who like good business ideas.
2. The Crowdfunding platform: Then you will find that there are many walk a platform on which to publish your project to apply for funding according to their category. At the end of the article we will provide some suggestions for you to choose which is best for your purposes.
3. The amount requested: At this point you must specify exactly how much money you need to spice up your business and how exactly it will be used. The more information you present and in more detail, the better it transmits greater trust and responsibility by yourself.
4. The period of evaluation of your project: Once you have entered your project, you must wait a period ranging from 30 to 120 days for the same to be evaluated by the community on the web and by donors who decide to invest in it. During this time you should do something to promote your project to be supported because it will determine the final decision on the granting of financial support.
5. Approval: Completed the assessment period, the platform issues a resolution that approves or denies funding. In some cases, approval really depends on you’ve found enough investors to believe in your idea and contribute to the funds. So that the approval is implicit in the fact gathering or not all requested.
If it is approved we proceed to the issuance of funds. And it should not be approved, a reasonable period is granted for you to make another attempt since most of the times it happens that the idea is very good but it is ill-conceived or inadequate documentation.
6. Source of funds: As described at the beginning, the funds for financing come from microlenders or individuals interested in supporting entrepreneurs and their projects and who are willing to donate small amounts to contribute.
7. Update your investors: It is very important and most platforms require reports and constantly update your donors on progress and achievements in your project. Remember this is step is very important because the primary purpose of a person who supports a venture does so pleased to see it done.
Tips for a successful project to raise Crowdfunding
The information public is crucial. Prepare your business plan well and above all ensures that your numbers are realistic and consistent with what you want to achieve.
Do not expect more money than you need or at least so it seems it may be the opposite effect from the time that investors perceive any data with suspicion.
It was concise and direct. Do not pretend that people read a document of 80 pages to believe in you. It is brief and efficient to convey the essence of your business idea.
Use videos, presentations and any additional resources you have to make it easier to understand your project.