Top 4 Pros and Cons of Crowd-funding

Crowd funding in the digital era has widely been a province of causes, special projects and artists who do not come with the expectation of any profits. You might be able to procure a front row ticket or an awesome T-shirt from the crowd funding investment, but not much more. While it is easy to think of this concept as an ideal way to get capital for a creative project, it requires an indistinguishable amount of preparation, good concept and an existing community with a little drop of luck to accomplish the goals. Here are a few pros and cons of the fundraiser concept that can help you start your small business at ease.

Pros

  • Capital Access: For funds that cannot be “loaned” from the banks and collected in a short time period, crowd funding is a viable option. While this is a no brainer, but there’s more to it than finance. By procuring cash, startups can do much more than reducing risks and validating the ventures before tapping into subsequent equity. This allows an integral pathway along the fund sourcing chain.
  • Building awareness: Crowd funding is an effective means of building brand awareness. The donators spread the word of mouth in the background while you work on your book or film!
  • Press coverage for free: Crowd funding can often be newsworthy. If the campaign had been performing particularly well as to catch the eyes of the ‘media’, free press coverage comes complementary with the deal. And who would deny a little publicity before a breakthrough?
  • Feedback: Whether a campaign accomplishes its goals or not, you will always receive feedback on the project. If people are swayed by the pledge and quality of the project, you know it’s going to be a quantum leap. If it escapes their notice, you know it need some tweaking or going back to square one; either way it’s far better than spending a fortune on a startup business to unravel the truth couple of years later.

Cons

  • All or None: In planning a fundraising campaign, an entrepreneur must calculate…

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