Top 6 Crowdfunding Myths And Its Importance
Crowdfunding has been a big part of the world since its conception. It’s never been an easy venture, but it is the one that has allowed people to come together and help fund new start-ups and ideas along with the individuals who are in big need of money.
The most important factor in crowdfunding is trust. People need to feel safe and secure when they invest their money into a product, because they have no guarantee they will see any of it back again. If too many people are not convinced, the campaign will fail and the purpose will not be fulfilled.
As crowdfunding becomes a more common thing for both platforms and companies, people tend to get caught up in all the myths about how it works. In this article, we will discuss 6 myths about crowdfunding that you should know to ensure you’re getting what you want from your crowdfunding project.
Myths of Crowdfunding
1. Crowdfunding is a waste of time.
2. Crowdfunders are only interested in money.
3. Only famous people can successfully fundraise through crowdfunding.
4. Crowdfunding is only for new projects.
5. I can’t afford to do crowdfunding, so it’s not for me.
6. We can’t afford to hire a large advertising campaign for this project
1. Crowdfunding is only for artists and musicians.
This is a common misconception- crowdfunding is a great way to fund any project, not just those in the creative arts. In fact, crowdfunding can be used for anything from a new invention to a business project. There are even crowdfunded housing projects available.
2. You need to have an amazing project to succeed with crowdfunding.
This is also untrue- popular projects on Kickstarter and other crowdfunding sites often have nothing unique about them aside from the fact that the people behind them are passionate about their project and are seeking support from others. In fact, the biggest success stories with crowd sourcing have come from projects that are very new to the market and industry.
3. Crowdfunding is only for projects that need money immediately.
Once again, this is not always true. Many successful projects have raised funds over time- for example, the Pebble Watch took four years to reach its goal. And of course, there are always exceptions to the rule, some very high-profile campaigns have failed because they ran out of funds too soon.
4. Crowdfunding is only for start-ups.
There are a number of legacy businesses that have successfully used crowdfunding, including fashion brands Martin Margiela and Opening Ceremony, technology companies like Ouya and Pebble, and restaurateurs like Jose Andres and Anthony Bourdain in UK.
5. Crowdfunding is expensive and time-consuming
Crowdfunding can be relatively inexpensive if you set up your campaign properly, and it can take less time than traditional forms of financing such as loans or venture capital.
- Crowdfunding is only for high-risk ventures
While some ventures may be inherently more risky than others, many successful crowdfunding campaigns have been for projects with low risk like a new clothing line or a mobile app that don’t require a large initial investment from the entrepreneur.
Crowdfunding is only for new businesses with no product or service to sell
This is not always the case. There are plenty of successful and well-funded businesses that have already launched products or services before turning to crowdfunding. In fact, crowdfunding can be a valuable tool for growing and legitimizing an existing business. Kickstarter, for example, has been incredibly successful at helping people fund projects like movies, games, and even entire businesses (such as Pebble).
Crowdfunding is only for high-quality projects
This is one of the most common myths about crowdfunding. While many projects do require a higher level of quality prior to being funded, there are plenty of great projects that get accepted through crowdfunding that don’t have the same level of quality. In fact, crowdfunded projects can often be less expensive and faster to complete than traditional projects.
Crowdfunding only benefits established businesses.
While it’s true that some crowdfunding campaigns target established businesses, this doesn’t mean that all crowdfunding is limited to these types of businesses. In fact, many new businesses turn to crowdfunding to get their business off the ground and raise initial funds needed to get running.
There are six myths about crowdfunding that you should know.
- Crowdfunding is only for Startups.
Crowdfunding can be used by both small startups and larger businesses.
- You need a million-dollar idea to succeed with crowdfunding.
There is no set amount of money you need to raise through crowdfunding as long as your project is ambitious and appealing, you can start fundraising immediately.
- It takes too much time to fundraise through crowdfunding.
Most crowdfunding platforms offer simple tools that make fundraising easier than ever.
- You have to give up your intellectual property rights to fund your project through crowdfunding.
Unless you are raising money for an invention or trademark, you retain all intellectual property rights in your project materials.
- Crowdfunding is only for creative projects.
Crowdfunding can be used for any type of product or service from technology products to clothing labels to food trucks.
- Crowd funding will never work for my business idea.
There are a variety of successful campaigns that focus on businesses of all types and sizes from breweries to car companies that succeeded with Crowdfunding.
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