Crucial Crowdfunding Guide

Listed below are some of the advantages of Crowdfunding and why any SME or Entrepreneur should consider it as part of their financing portfolio;

• It can provide access to capital
• It can help hedge against risks associated with new product launch
• It can be an excellent marketing tool, and allow you to test elements of your marketing approach
• It can provide proof of concept, and help you test and prove the popularity of your product
• It can facilitate crowdsourcing of brainstorming
• It introduces prospective loyal customers
• Your backers become part of your marketing team
• It provides the opportunity for pre-selling
• Unless equity Crowdfunding, no transfer of shareholding or ownership of the business is a consequence of the financing
• The project may receive unexpected and useful advice, and even tangible offers of assistance
• If at first you don’t succeed, you can try again.

On the flip side, there can be negative consequences associated with Crowdfunding, including the following;

• It can be stressful, and requires tireless effort to succeed
• It is not like a traditional product pitch – the crowd funder must be clear on who is the target consumer, and will require knowledge of consumer marketing, social networks and social marketing techniques
• It requires a high level of creativity in how you publicise and promote the offering
• The business / product is immediately in front of the public, and competitors
• The project must be sufficiently interesting to a sufficient number of people to have a chance of success
• Any successful project requires dealing with a large number of stakeholders all with different expectations and demands
• Lack of guidance
• You will need an advanced knowledge of Social Media
• Projects compete against other projects as well as industry competitors
• It doesn’t always work
• Even if the project gets funded, it may still fail for other reasons (legal, moral & reputational consequences).