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What is Crowdfunding?

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The root of any business or venture lies in an idea, and the idea needs the wings of money to soar high. Money is the lifeblood of any project. It is a remarkable resource and also the ultimate goal for any startup or business. But we often find ourselves in a bind to get enough funds to start a new project, and here is an effective and well-ordered technique to acquire them– the crowdfunding.

As the name suggests, crowdfunding is a method in which the crowd funds a project instead of a financial organization or a few investors. The crowd can be comprised of organizations, business firms, groups, or individuals, where a limited amount of money is contributed by each entity. The most important factor in obtaining funds from the crowd is to attract their attention and convince them that your initiative is worth their investment.

As per the records, the artists are said to be the initiators of this kind of funding campaign when, in 1997, a British rock band collected funds for their reunion tour with the help of crowdfunding from their fans. Most such funds are raised on internet platforms by displaying the purpose of the collection, the time frame and the target amount for the event. People have even collected money for philanthropic purposes and have gained an overwhelming response from the audience worldwide.

There are four categories of crowdfunding, classified as debt, equity, rewards and donation:

Debt based Crowdfunding: In this category of crowdfunding, the money is given in the form of a loan with the purpose of earning interest. As such, this type of crowdfunding is also known as “crowdlending”.  

Equity based Crowdfunding: In this case, the lenders own a share of the company or business based upon the amount they invest. They also earn a profit in proportion to their investment in the business.

Rewards based Crowdfunding: Reward based funding is when the lenders invest with an expectation of receiving rewards in return. The rewards distributed are generally in the form of products, services, or even discounts.

Donation based Crowdfunding: This type of funding is done with a sense of philanthropy or just with the intention of supporting your business. In this type of funding, the lenders expect nothing in return.

You can use any of these crowdfunding techniques to raise funds for your venture. Donation based crowdfunding can be very beneficial if you are contributing to a good cause. Reward based crowdfunding can be a great contributor if you have a product or service that needs marketing. Each of these techniques has their own benefits, and you can use them as per the type of business you are raising funds for.

Tips to run a successful crowdfunding campaign:

  • Make yourself easily available to your audience and your lenders. Maintain an open line of communication with them. 
  • Plan an attractive and engaging campaign. Either in the form of pictures, videos, concerts, virtual events or posters and discuss your initiative with people around you even before you start campaigning. Make it authentic and present it in a way that it easily stands out among other projects.
  • Talk about how passionate you are for your project and inspire people with your dedication and devotion to your work. Make an emotional connection with them. 
  • Try to maintain transparency throughout the campaign. It helps to earn their trust.
  • Keep in touch with your investors even when things go wrong. Keep them updated even after the end of the campaign. Discuss the result and how you attained the purpose of your initiative.
  • Maintain a good relationship with your supporters even after the project ends. Most of them are those who appreciate your work and look forward to its progress. Support from those who appreciate you will always inspire you to do well.

In addition to this, make sure to create an unforgettable experience for your audience. With the help of Vibrnz, you can create your own crowdfunding campaign with a few simple steps and get the funds for your project. You can share your story, ideas, purpose, and even artwork to attract lenders to support your cause and grow your funds multifold.

 Thank you.


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What is Crowdfunding - By Surabhi Thakur
In this blog Surabhi introduces us to the concept of crowdfunding. The concept of crowdfunding as emerged as a popular option for entrepreneurs validate their ideas and gain funding from the community. Read more.
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