Another way of funding your startup business is through Crowdfunding. Crowdfunding is a method of raising capital through the collective effort of friends, family, customers, and individual investors. This approach taps into the collective efforts of a large pool of individuals primarily online via crowdfunding platforms. The big idea is to persuading individuals to each give you a small donation — R100, R500, R1000, maybe more. Once you get thousands of Rands, you have some serious cash of funding your startup business.
Defference between crowdfunding and other busisiness financing methords?
Crowdfunding is essentially the opposite of the mainstream approach to business finance. Traditionally, if you want to raise capital to start a business or launch a new product, you would need to pack up your business plan, market research, and prototypes, and then shop your idea around to a limited pool or wealthy individuals or institutions. These funding sources included banks, angel investors, and venture capital firms, really limiting your options to a few key players. You can think of this fundraising approach as a funnel, with you and your pitch at the wide end and your audience of investors at the closed end. Fail to point that funnel at the right investor or firm at the right time, and that’s your time and money lost.
Crowdfunding platforms, on the other hand, turns that funnel on-end. By giving you, the entrepreneur, a single platform to build, showcase, and share your pitch resources, this approach dramatically streamlines the traditional model. Traditionally, you’d spend months sifting through your personal network, vetting potential investors, and spending your own time and money to get in front of them. With crowdfunding, it’s much easier for you to get your opportunity in front of more interested parties and give them more ways to help grow your business.
Disadvantages of crowdfunding
If you don’t have an engaging story to tell, then your crowdfunding bid could be a flop.
Here are more factors that can better ensure a successful crowdfunding campaign:
- Have at least a small network of enthusiastic friends and family willing to help get the ball rolling by giving and urging others to give.
- If you’re giving out perks in return for money, make sure the perks are cool.
- Present a serious business plan and an explanation of why the money will take your enterprise to the next level.
- Demonstrate that you have your own skin in the game because of the personal funds you have already poured into the business.
- Include a video pitch and keep it short and concise, with a call to action.
- PBS includes different rewards for different levels of giving; so should you.
- Be prepared to essentially live online, staying active on social media sites, until the crowdfunding campaign is complete
List of Crowdfunding websites in south africa
Dropshipping business, find out how
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The biggest difference between dropshipping and the standard retail model is that when it comes to dropshipping, the person marketing and selling the product doesn’t own the stock.