The introduction of crowdfunding in the financial industry has undoubtedly changed the way people view fundraising and capital raising. In the past, traditional lenders were the go-to financiers for almost anything from buying a house, purchasing a car and even borrowing initial capital investment for a business idea.
Most of these still hold true up to this day but social funding has changed how startups gather initial capital for a business idea. They are now able to harp on the power of the crowd and even their intended market to help fund their financial need. They now have an alternative that works and even develops their customer relationship over time.
Crowdfunding has been at the forefront of capital raising ventures for these startups but project initiators must understand that the platform provider they choose will play an important role as well. These sites will help connect them to the other side of the equation – the donors. Project initiators must keep this in mind as they launch their crowdfunding campaign.
Crowdfunding platform providers
Here are a few things you might want to consider when choosing the right platform provider for your social funding project.
- Take a look at the platform you need. To do this, you need to understand what your project is all about. Do you need donations for a worthy cause or do you need money for a business venture? If it is the latter, will you be offering rewards in exchange for funding or are you willing to give up part of your company as equity? These are just some of the questions you need to answer to help you understand your project better. And the better you understand your project, the better you would know which crowdfunding platform you should choose.
- They have their own niche. Once you identify the type of platform you need, you then have to take a close look at the company running the platform. You also need to consider if they have developed a niche market over time and if it serves your funding need. They might have been known to help struggling artist or tech startups. There are also some very specific platforms like dealing with real estate or even book publishing. You need to consider these factors in light of what your project is to maximize the relationship with your platform provider.
- Look at the success rate. Once you have narrowed down your choices, you can start looking at their turnaround rate on successful projects. This is a good benchmark for the quality of projects and investors that use the platform. But you need to remember that at the end of the day, you still need to put in a lot of hard work into the campaign and not rely totally on your provider.
- Look at the investors in the platform. You might want to put a little more attention to the quality of the investors that support the projects on the platform and see if they are your market. If you are able to understand the types of projects that they are supporting, it could give you an idea on what campaigns work on that specific platform.
This article is written by the Crowdfunders Editorial Team. In Asia, Crowdfunders.Asia is a leading portal on providing news related to crowdfunding, start-up, property and business. It is operated by CoAssets.com. CoAssets is South East Asia’s first listed and largest real estate crowdfunding platform. If you have any Crowdfunding news or stories to share, please email [email protected]