What is crowdfunding? – Discover everything about crowdfunding and its financing strategy

When you have a company, you have to do different procedures to get out in terms of money. In this sense, there is a wide variety of actions that a person can do in the business field in order to get an investment. One of them is Crowdfunding, so in the article we will explain what this exercise is and what it is about. So you know how to ask your friends for a loan or help.

Concept and meaning of crowdfunding

Crowdfunding is a procedure that many people use in order to raise funds. Especially those small companies that are in your start-up, that is, its initial phase. Where credit is sought beyond that provided by banks with financial standby or sponsors for promoting a brand.

In this sense, the main idea is to collect money in order to give a boost to the person’s economy. The meaning of crowdfunding comes from English, a language in which you can translate as collection. However, it is also called petition, its name in Spanish is micro-patronage.

What is crowdfunding for?

Crowdfunding is a tool that It became popular in 1997. when a music band used it. Therefore, it is not a process linked to the business world, since any type of organization has the power to start a collection campaign. So, the function of crowdfunding is to help a certain group to add a little money without having a reward in return. It is a kind of monetary donation.

In this sense, many people carry out crowdfunding in times of need, illness or when they need to make an investment. In the same way, at the beginning of a company, in its first steps or start-up. What differentiates crowdfunding from a normal collection is that this campaign runs on the internet. Through websites and social networks.

How does crowdfunding work?

The function of crowdfunding is to raise as much money as possible through an internet campaign. So that the person who performs the action has a capital injection to make an investment. In that sense, the goal is to get a loan from a group of people and take the opportunity to do something productive.

The important thing about crowdfunding is that once the campaign is created, you have to do a lot of publicity. That is, you must take advantage of all means possible in order to spread the account and thus obtain the money. This is where social networks come in, especially Twitter.

On the blue bird platform it is very common to find this type of request. So you just need tweet a post and ask users for help. With some luck, you will find people of good will who donate money without asking for a reward. Although it all depends on the project you present.

What are the advantages and disadvantages of crowdfunding?

Crowdfunding has many advantages and a few disadvantages that must be observed or analyzed. In this sense, the first point in favor is that you can earn money just by asking other people for it. However, do not think that it does not take work, because you have to do a great job in terms of advertising.

Well, you are not going to get to the platform, place the campaign and the money starts to fall. Rather, you must explain your reasons, say that you want to do a business start-up or need funds to pay for something. You need to talk to potential donors and negotiate. In addition, you will have to spend a lot of time on the internet, making publications.

On the other hand, in advantages and disadvantages crowdlending must be mentioned. This is a process in which crowdfunding changes based on the people who contribute money. Crowdlending occurs when there is a company or organization that intends to help another to emerge. However, here there is no longer talk of donation, because a reward is sought.

In crowdlending, a stable company or businessman contributes a large and important sum of money. However, he does not do it for charity, but rather request to be advertised or ask for specialized services. In that sense, it can be a percentage of profits in the future or certain products that the small company will sell. The function is to help, in order to obtain benefits in the economy.

Is crowdfunding reliable?

Crowdfunding is legal and reliable, however, you have to be careful. Well, just as there are people who seek that impulse to emerge with their business, there are others who commit fraud. Well, they just want to be given money for personal purposes such as buying phone, traveling and satisfying tastes.

On the other hand, there are also those who request donations to help the sick. Well, they don’t have the way to pay for operations or medicines, so they resort to the goodwill of the general public. There are also companies animal support or ecologists that rely on what crowdfunding is for social welfare.

What is needed for crowdfunding?

Now, once you know the function of what crowdfunding is, let’s see how to apply one. You need a bank accountIf it is from a foreign bank, better. Well, it is possible to receive help from anywhere in the world. Then, you need to sign up for one of the pages where crowdfunding is applied. One of the platforms that is recommended is Go found me, although there is a lot of variety.

How to take advantage of crowdfunding strategies?

Once the campaign is complete and you can receive donations, it’s time to take advantage of social media. Remember to explain the reason for the request, where it is important to be sincere. Withdraw the money when a considerable sum is accumulated. Finally, apply an investment to help your economy and reward your sponsors, at least with a mention.

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