How is crowdfunding changing the way startups raise money?

The concept of startups has recently gained traction. The Indian start-up attracted a lot of attention last year when wealthy foreign investors placed large bets on emerging Indian businesses. The third quarter of 2021 saw the most deals ever made and the biggest deal value, while a number of consumer-focused start-ups had explosive debuts on the Indian stock market. With this increase, the concept of crowdfunding has also taken the limelight. Crowdfunding is the practise of using small donations from lots of people to finance a business without using regular channels. These businesses can start up or start new projects by getting the essential boost to cash flow. The majority of these campaigns take place on online platforms, have predetermined deadlines for when money can be raised, and specify precise financial objectives. In research done by one of the management colleges in Kolkata, it was found that the average success rate of crowdfunding campaigns is 22.4%. Let’s discuss ways in which crowdfunding is changing the way startups raise money.

1. You do not need to have good speaking skills 

In the old business funding system, business owners needed to have good presentation skills. Presentation was essential, so you had to be able to speak clearly in front of an audience, be flexible when responding to inquiries, and frequently travel the country to meet with various investors. Everything is different with crowdfunding. It all comes down to being able to effectively represent your company online.

2. Broader audience of investors 

You probably only had a small number of investors interested in your business in the past, and they were frequently not first-time investors. They were individuals who were considering making a large financial contribution to your company. In essence, this gave you a smaller audience with more stakes as an entrepreneur. On the other hand, with crowdfunding, all you need to do is discover like-minded people who are willing to donate a small amount of money. You don't need to find the ideal investors or consider how you're going to appeal to the people you're about to meet. This is simpler for some businesses.

3. Crowd funding is a great marketing tool for many startups 

An active crowdfunding campaign is a wonderful way to introduce a venture's general objective and vision to the market. It is a free and simple means to reach multiple channels. It is simple to drive referral traffic to your website and other social media sites thanks to the social media mechanisms that are included in many crowdfunding platforms. This usually enables businesses to get thousands of organic visits from distinct users and possible investors. These people are crucial for viral marketing since they can share and tell their contacts about the campaign.

4. Pre-sell opportunities for startups

An entrepreneur can pre-sell a product or idea that they haven't yet brought to market by starting a crowdfunding campaign. This is an effective technique to assess consumer response and examine the market before deciding whether to pursue or abandon a certain proposal.

5. Free-of-cost refining of ideas

Being able to fill all the gaps a venture can have at an early stage is one of the toughest problems for small firms and entrepreneurs. A crowdfunding campaign gives the business owner the chance to interact with the public and get suggestions, criticism, and opinions. This input is incredibly helpful since it might shed light on previously unconsidered parts of their business. It might also give rise to some new concepts!

Crowdfunding is a new way of raising funds for startups. Crowdfunding is a great approach for business owners to get the money and attention they require to validate, carry out, and support the expansion of their ventures. What was once a social experiment that was conducted a few years ago has proven to be a useful tool for thousands of individuals. There are many MBA institutes in Kolkata and in other states that organise activities where their students have to come up with business ideas and present them in front of real investors. This gives them exposure and an opportunity to showcase their ideas. Bengal Institute of Business Studies is one of the management colleges in Kolkata that gives opportunities of this kind. They give practical exposure to their students to equip them with the required entrepreneurial and management skills.