Crowdfunding, as the name suggests itself, is a platform where the entrepreneurs present their idea to a large audience who in turn, invest in the idea. These are not serial investors investing big sums but common folk putting in small amounts of money. What makes this concept viable is the reach of such proposal which can go up in thousands. When this many people invest even small amounts, it makes up substantial seed fund for an enterprise to take off.
But what is an even more important facet of crowdfunding is its marketing prowess that has been almost unrealised for such a long time. If Dr Phil Windley, an expert technologist and a serial entrepreneur, is to be believed, a crowdfunding campaign not just lets you obtain funding but it also validates your idea by the very audience it is meant to cater at a later stage in its life (Forbes). It allows you to pitch your idea to thousands of people from a variety of backgrounds and lets you record their response and their reactions regarding your product. What’s more rewarding is the fact that it doesn’t take much of your energy to communicate these investors, your idea. All you do is make a concise video that clearly explains your idea to the investors and is easy to understand and also gives the investors a glimpse of its profitability by supporting your idea with evidence of future earnings.
It’s not just the start-ups that are using such platform. Big brands have started engaging consumers in online campaigns, hence enabling them to have more insights into their customers. Big brands like Honda, DC Comics and Dominos have used crowdfunding platforms to support social causes with assistance from public and in return offers them perks such as limited edition comics and coupons. This makes the donors believe that they are working together with the brands.
But even crowdfunding platforms are not full proof and you must not overlook the demerits of crowdfunding before putting your product up on the platform.