Crowd funding : Next Generation Source of Funding

With the advent of technology, aspirations have also increased. However, the global economic problems act as a bottleneck for aspiration of many entrepreneurs. Nevertheless, slowly a new phenomenon is catching the attention of investors, small business, and organizations. The new phenomenon is called Crowd Funding and it has gathered the headlines by collating the wide world into a smaller window.  

Crowd funding can be defined as an effort of individuals who network and collect money, to support efforts initiated by other people or organizations. With the advent of internet and social media, Crowd Funding has become more convenient for most people or business that needs funds to build upon their venture. In 2013 the Crown Funding trends that are catching attention are:

• JOBS act

The new JOBS (Jumpstart Our Business Startups) act will encourage funds to be invested in small business. Before the act, the startup could not give legal equity to funders. However, with new act, the policy has changed. In addition, it is expected that there will be a manifold rise in funding for business through crown funding.

• Women entrepreneurs have a upper hand

Most women are more active on social media. In addition, women are also known to be better collaborators. It is very important to be in touch with audience regularly to get support. Hence, women entrepreneurs can use this new funding platform more effectively than male counterparts can. For instance, an upcoming Florida based writer raised more than $5000 for her first children’s book through crowd funding.

• Local Communities

With the increasing disposable money available to consumers, some ventures might get their next investor in neighborhood. However, such Investors often prefer to meet in person the entrepreneur whom they are funding. Some crowd funding platforms are available have mushroomed to help like-minded people meet on a single table.

• Ideas that solve a problem

Many investors will come forward for an idea or venture that solves social problems. For instance, mobile solutions to help farmers or help students who cannot afford book are problems that look small but have a bigger social impact. Such ideas give social reputation to investors. Hence, many communities or investors are easy to find for problems that address a social cause.

Our whole discussion of crowd funding has been on assumption that an entrepreneur is short of money. Each penny matters. Social media is a tool that saves lot of money without expensive parties, rental fees and other operational headaches. Hence, it is very important for future entrepreneurs to have online presence. The online presence through social Medias offers a chance to connect with communities whom might not only help by funding but also provide feedback can help to fine-tune the final product.

Online presence through social media is a worth investment to run a successful crowd fund campaign. Without online presence through Twitter, Facebook, Google Plus, LinkedIn etc most entrepreneurs will end up paying precious dollars to local newspapers for advertisements. To conclude, most money raised with crowd funding is done in exchange for product. With new regulations in place, the market is getting innovative and it is still growing.