Crowdfunding is defined as the funding of a venture or project through the raising of small amounts of money from each of a large number of people in exchange for a pre-defined reward. No stock options, loans, or venture capitalists needed, you just have to convince a whole lot of normal everyday people to invest in your startup company.
This is done by way of a website portal where everyone can see your project and donate or purchase goods or services. Individual contributions may not be much, sometimes just $10 or $20. However, we must consider the potential of the Internet.
To give you an idea how successful this method has been for a lot of entrepreneurs I recently read some statistics from the research firm Massolution and they estimated that about $5.1 billion dollars has been raised on crowdfunding portals in 2013 which is nearly twice as much as in 2012.
Please understand, they’re not selling stock or borrowing money on these crowdfunding websites. They are merely pre-selling their product or their service, their movie, their music or just flat out getting donations from lots of people. It really is super cool to see ” the crowd” back entrepreneurs on these crowdfunding websites supporting entrepreneurs and their dreams. The last time I looked the largest crowdfunding campaign was the Pebble Watch raised over $10 million pre-sales of their watch.
So needless to say, this become a very viable method for the entrepreneur to finance their company. But in reality these crowdfunding websites/portals are nothing more than a e-commerce platform that allows the average entrepreneur to set up a store to pre-sell their product or service. From there the entrepreneur must market and drive traffic, using social media, email marketing, etc. etc. to the store asking people to buy their product or service or support their venture through some kind of reward.
So depending on how much money you need to raise, your pre-money valuation and your upside potential this may be a very viable alternative to looking for investors. If you feel this may be for you please visit www.Angelnetwork.com/crowdfunding and if you would like a copy of Greg Writer’s book titled “Saving America One Crowd @ A Time” visit www.SavingAmericaOneCrowdAtaTime.com