3 Pros and Cons of Startup Crowdfunding
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3 Pros and Cons of Startup Crowdfunding

Raising capital for your startup doesn't have to involve Venture Capitalists, Angel Investors, or even a bank. Here's how to raise a round with Crowdfunding to get your startup off the ground.
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In the advancing world of business, it is easy to feel lost in the endless waves of new entrepreneurial ventures, especially when you are trying to claim your own seat and launch your own project in the industry. 

Raising capital, gaining momentum, and making yourself known is crucial to funding and creating a successful business.

Getting Started

What is a startup?

To put it in simple terms, a startup is a company that brings a new, unique product or service to the market with the expectation that it will grow and gain momentum and revenue quickly. 

A startup is successful if it generates money quickly, is adopted by the market quickly, grows quickly, and gains momentum quickly. 

This makes startups very volatile, uncertain, and susceptible to failure. 

What is startup crowdfunding?

Startup crowdfunding is raising money from dozens to hundreds of investors, usually through an online platform. 

Startup crowdfunding is usually more attractive for startups because funds are collected without the interference of banks and venture funds, and crowdfunding has the potential high reward. 

Positives of Startup Crowdfunding

1. Gain momentum for your startup

If your startup begins to receive lots of attention through crowdfunding sites, chances are that your startup will gain a lot of traffic and lots of revenue. With more attention and funds being pooled towards your startup, it only becomes easier to create a launching pad for your startup.

2. Idea validation

Are you unsure whether or not your startup is something that could potentially be successful? Try testing the waters by crowdfunding for your startup to see how people respond to your idea. Sometimes, no traffic on these sites can be a blessing in disguise before you invest a lot of your money and time into an unfruitful idea.

3. Create networks

There are plenty of investors on these crowdfunding sites that are looking to support the next big thing. These individuals have seen countless startups come and go, and the benevolent ones can be useful connections who can help develop your startup or know people who can help.

Negatives of Startup Crowdfunding

1. False idea validation

The crowdfunding business is not always linear in its production. A great business idea does not always generate lots of funds, and a terrible business idea does not always fail. While most investors on these sites are well-informed, there is a lot of herd-mentality within these websites. People will support what they see people are supporting.

2. You need to put in some to win some

Nobody on these crowdfunding websites are going to support a startup that isn’t well-developed or have the potential of being successful. If you’re going to sell your idea, you need to make your idea sellable. This means putting a lot of time, money, and effort into your startup. If you plan to crowdfund, you’re going to have to fund your idea first before it can be crowdfunded.

3. Idea theft

The startup field is highly competitive and full of ideas that are just waiting to be launched. While there are investors on these startup crowdfunding sites, your competition is also on these sites. If your idea has the potential to be repackaged because of blurry lines, it’s possible that someone can take your idea and resell it. 

Where do I start?

Kickstarter has over 15 millions project bankers in counting and is a well-trusted, well-known company. It’s a highly competitive crowdfunding site that fuels campaigns in tech, art, and design. 

Indiegogo is one of the most crowdfunding websites for startups, launching 19,000+ campaigns per month. Because the site is global, you can fund your startup from investors all around the world. 

Startengine is also a great crowdfunding website, having raised $500 million dollars up to date. It funds startups from tequila businesses to data privacy softwares.

Keep in Mind

When you’re deciding which website to crowdfund your website, keep the following in mind: funding needs, eligibility, website fees, cash-out requirements, and success rates.

Remember to read the fine print of these websites before launching your startup anywhere.