Crowdfunding (or crowd financing), as its name suggests, is one of the ways you can fund your business idea. It involves raising money from people who are ready to support you and finance your start-up via a specialized crowdfunding platform. When the total amount needed is raised, “investors” receive rewards or recognitions in exchange for their contributions. In 2013, the crowdfunding industry reached $5.1 billion worldwide.
Top 5 benefits of crowdfunding
- Easy access to funds, without any ratings, indicators or paperwork.
- You get support from people who believe in you. If you have a small community who cares for your business, you can ask them to finance your growth. You no longer need to get a loan from a bank.
- You test your customer’s loyalty and you take the relationship with them a step further. If there are people ready to support your business because they like your product/services, you already have a solid sign that you’re going in the right direction.
- You avoid the lengthy bank loan hassle, which sometimes ends up with a big “No” to your funding request.
- Crowdfunding is the perfect “excuse” to focus on your marketing channels. You have to sit down and think about your brand and seek original means of promoting it. A crowdfunding campaign forces you to find creative or concise ways to spread the social media buzz, to wrap up all your intentions into powerful messages.
Some of the most popular crowdfunding platforms for European start-ups are:
- Wemakeit.ch, founded in 2012 in Switzerland has 60 000 active users, more than 1000 projects and 70% of all campaigns successfully completed. Recently, it spread its “funding wings” in Austria as well.
- Companisto, based in Germany, has 36,241 registered Companists (members of their community). Since its beginnings, it funded 41 start-ups with exactly 19,095,030 Euros (invested capital)
- 100-days.net focuses on entrepreneurs from Switzerland, Germany, Austria and France who seek funding for creative projects from music, films, to sustainability & organizing events.
- Crowdcube has 167,819 registered investors. So far, they successfully funded 243 businesses with £80,651,910.
- FundedByMe focuses on supporting European cross-border investments. They have operating offices in Germany, Sweden, Denmark, Finland, Norway, Spain, Italy and Singapore but their reward based orderings are available worldwide.
Crowdfunding is the funding mechanism of choice for numerous actions, including charitable or social causes, education, music events, independent movies, scientific research, TV shows or nonprofits.
With such initiatives, it’s easier to see your project come to life, especially if you have a community which believes in you or you have a powerful business idea that convinces people. Good luck with funding your dream start-up!