What are the benefits and drawbacks to crowdfunding?
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Transcript of What are the benefits and drawbacks to crowdfunding?
CrowdFunding
What are the benefits and drawbacks
to CrowdFunding?
FAQ
The benefits to CrowdFunding are many
CrowdFunding, however, does not replace traditional methods of raising
funds but it is a new way to source funding for your idea
1. Market Validation
In many respects CrowdFunding is a great way to test if the ‘crowd’ likes
and supports your idea
You will be able to use the crowd
as focus groups for feedback, tap into their knowledge and advice,appeal to their circle of influence for
additional support
You can also use the support of your ‘crowd’ as social proof to
gain more publicity attract a larger following
apply for other types of funding
2. Limited Financial Risk
Most CrowdFunding websites do not charge you an upfront fee to profile
your campaign
Most websites charge a fee only if your campaign gets funded
3. It is very cost effective
The creative elements of a campaign such as writing up your story,
taking photos, and creating a video require little capital outlay
but do require time
4. You Keep Control
You do not need to compromise on any aspect of your project as you
maintain control over creative vision, costs, product delivery, marketing
and investor expectations
5. You Retain Ownership
Excluding Equity based CrowdFunding campaigns you retain total ownership
of your idea or business
You also get to retain all the profits your idea or business makes
6. Gain Brand Advocates
As your CrowdFunding campaign gains momentum some of your
supporters will want to be directly involved in helping you succeed
Drawbacks to CrowdFunding
Managing a CrowdFunding campaign does require
time, effort, energy and money in order to succeed
1. Time
You are on call 24/7 when you manage a CrowdFunding campaign
You will need lots of time to promote your campaign and answer questions
2. Social Media
You will need to master many aspects of Social Media before you launch
Communication with your supporters needs to come directly from you
as the project creator
3. Campaign Length
A typical campaign can require 2 months of planning, 1 month for the campaign and another for follow-up
That’s 120 days of time and effort you need to set aside to succeed
4. Shortage of valuable information
There is a lot of top-line information about CrowdFunding online
But there are very few online resources where you can get all of your
CrowdFunding questions answered
5. Visibilty and Privacy
To be successful at CrowdFunding you must be prepared for
full personal online exposure
You need to do this in order to build trust with your supporters
6. CrowdFunding is not yet a household term
You will have to spend a lot of time explaining what CrowdFunding
is all about and setting expectations
Less than 50% of CrowdFunding Campaigns succeed but
being aware of the pros and cons before you start will help you get the
results you are looking for
There are many more resources available to support your CrowdFunding efforts at
CrowdFundingFocus.com
CrowdFundingFOCUS