Despite criticisms and risks, the advantages or benefits of crowdfunding has brought forth numerous applications and corresponding gains to both fund seekers and funders.
The Applications of Crowdfunding
Crowdfunding has been applied for various purposes. Take note of the following:
• An alternative financing option that serves as a source of initial capital for startup business ventures or to raise further capital for an ongoing project.
• Specific crowdfunding platforms have been launched to fund non-profit projects such as causes and advocacies, medical needs of individuals, and other charitable causes.
• Artists such as musicians have used crowdfunding to initiate or pursue further their creative projects such as the mounting of an exhibit or the production of a recording album.
• Crowdfunding has been used to finance novel business organizational models such as social enterprises, community music labels, and timeshare properties, among others.
The Benefits of Crowdfunding
Crowdfunding has several advantages or benefits. Take note of the following:
• Gives entrepreneurs, inventors, and creative professionals an alternative way to raise funds to pursue their projects minus the bureaucracy that comes with traditional funding sources.
• Crowdfunding has the potential to attract a large number of funders from around the world because the entire transaction is mediated through the Internet and by an online-enabled crowdfunding platform.
• Entrepreneurs can get determine market interest, potential market performance, and early feedback about their ideas or products from the crowd of funders.
• Notable projects have the potential to gain free publicity through electronic word-of-mouth coursed via social networking websites, reviews, and online publishers.
• Crowdfunding provides individuals with an alternative option to invest their money on a venture or product they deem interesting.
• Investing via crowdfunding costs less than other investment options such as equity or stocks and purchasing of other financial instruments.
• Another one of the benefits of crowdfunding is that it encourages entrepreneurship, thus promoting the generation of ideas and the development of possible game-changing products.
A detailed and long-form version of this article appears on Profolus.com authored by Mathew Emmanuel Pineda with the title “Advantages and Disadvantages of Crowdfunding.”
