Understanding the Basics of a Successful Online Crowdfunding Platform

by | Jan 14, 2016 | Business

An online crowdfunding platform provides the community an easy and effective method to raise money from the donations of family, friends, customers or investors. This approach is developed on a platform that reaches a large group of people and some international platforms reach the entire world. A major tool that exposes these efforts of online crowdfunding platforms is social media as it creates a network of expanded connection and a far greater reach.

An online crowdfunding platform is basically the opposite of the average approach utilized in business finance. In a traditional sense, if a company or individual desires to raise money to launch a product or start a business, they would spend countless hours and dollars on preparing a solid business plan, research the market and prototypes and hit the pavement to present their idea to an endless number of financial institutions and wealthy investors. Every avenue including banks, venture capital firms and angel investors would be on the list of prospective money connections. This process limits the pool of resources and sets up the presentation for a firm yes or no.

On the other hand, an online crowdfunding platform broadens the spectrum and increases the chances of success. The entrepreneur builds a single platform, designs a showcase and shares the pitch of the business plan. The traditional methods require the creator to spend endless hours sorting through a personal network, scouting potential investors and not to mention the amount of money spent to fund the entire process, which may or may not end with a ‘yes’. Crowdfunding presents a much better opportunity to land the campaign in front of the target audience. In fact, the pitch can be made to prospects around the globe at the same time. This presents an opportunity for the donor to contribute a small donation for a reward or invest thousands in return for equity in the business.

The benefits of an online crowdfunding platform are endless; a crowdfunding campaign allows the creator to experience a process that views the business from the very top to include its offerings, history, position in value and the market it addresses. All can be easily presented in the same location at the same time and with the click of the mouse. The online fundraising efforts present a funnel approach that spins across social media and reaches every intended audience member in very little time.

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