1. 1. Wht r th pros nd cons f crowdfunding? Today, n increasing number f start-ups nd artists r utilizing th crowdsourcing phenomenon knwn s crowdfunding. Crowdfunding describes th cooperative effort f individuals wh network nd pool thr resources v th internet t support efforts initiated b people r organizations. Crowdfunding hs bn usd t support number f activities suh s disaster relief, support f artists b fans, political campaigns, start-up companies, movies, nd free software development. Obviously, n n s th enormous potential f crowdfunding. Crowdfunding allows mr individuals t mk thr dreams nd ideas m t fruition. Kickstarter hs raised $574 mlln sn ts start n 2009. n th lst s months ln, Kickstarter ws bl t raise $203 mlln dollars, nd t dsn't sm t b slowing dwn. n addition, thr crowdfunding sites suh s Indiegogo, Crowdfunder, RocketHub, nd Crowdrise r equally n thr w t th sm growth nd success. However, whl crowdfunding m sm lk vr start-up's dream m true, smart entrepreneur must lws weigh th pros nd cons bfr deciding t utilize ths method t raise capital. The Pros Entrepreneurs frm ll rund n testify t th struggles nd difficulties f accessing capital t finance nw ventures. Crowd-sourced funding s great alternative t seeking venture funding bus users r bl t d s wthut gvng u equity r accumulating debt. nstd, entrepreneurs n distribute products r gifts t th funding community n exchange fr capital, ls knwn s rewards-based crowdfunding. In addition, crowdfunding platforms r great w t market nw business nd generate awareness. hs sites r typically free nd offer wide variety f ways t reach large number f people. Fr example, businesses r bl t promote thmslvs nd thr mission thrugh social media channels, word f mouth, nd increased referral traffic t thr company's website.
2. 2. One f th biggest advantages f crowd financing s tht t allows ventures t gain consumer feedback earlier n th process. Successful businesses us customer suggestions t better thr processes, products, r services. Unfrtuntl, smtms ths changes r md w t late n th game, causing th business t fail. Crowdfunding eliminates ths anguish b allowing entrepreneurs t gauge customer reactions, foster users' ideas, nd test th product bfr t vn hits th market. t nl ds ths save company frm experiencing large financial loss, t demonstrates tht business s ready nd wllng t listen t thr customers rght ff th bat. The Cons While crowdfunding hs large number f benefits, thr r sm disadvantages s well. Fr example, ths funding method exposes n entrepreneur's idea nd detailed insider nfrmtn t potential competitors. hs increases th risk tht th owner's idea m b copied r stolen, sll f th competition hs better financing. Another drawback t crowdfunding s tht t s nt viable method fr long-term financing. Whl t s great fr funding small, one-time projects, t s nt s great fr generating n ongoing flow f financial resources. wvr, companies n lws us crowd financing s n additional fundraising tool; fr example, specific project nd suh s promotional event. Additionally, th amount f money venture s bl t raise s limited. Crowdfunding caps th maximum amount allowed t b raised t $1 mlln dollars n n 12-month period. hs s huge downside s mst start-ups nd muh mr thn tht t vn gt ff th ground. us f ths, mst companies wuld benefit fr mr frm angel investors r venture capitalists f th wr seeking substantial amount f capital. Although thr r mn benefits t crowdfunding, suh s greater access t capital, better brand visibility, nd direct consumer feedback, n must proceed wth caution. It's mrtnt fr entrepreneurs t weigh th pros nd cons f ths method bfr making n strategic fundraising decisions. n mind tht crowdfunding exposes ur idea t competitors, caps th amount allowed t b raised, nd s n unreliable w t generate on-going capital. n u hv considered ths factors, move forward n confidence tht u hv md th rght decision fr ur business.