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Crowdfunding - The New Way To Finance Your Business

There are so many resources to work with these days when it comes to implementing an idea. Bands can make new albums, artists can make new pieces, and you can make a new business all with one tool called crowdfunding. This new way to fund projects and start-up companies is fairly simple and is relatively risk-free. This is a far call from the way businesses used to begin, with so much risk in the hands of the developer. Learn now how crowdfunding works to see if your idea, project, or business can use it to grow.

Ask Around
This process involves asking favors; so if you are not willing to do that, pick another venue. You basically ask for help with investing in your company, in exchange or goods or services. So it is selling products that you have not yet made, or promising goods to hook investors.
For example, many people have set up a crowdfunding page to start collecting money for their new music idea. One man made a video about why people should invest (or pledge, really) in him. Then he set up amounts of money that people could donate to his cause through a safe server, in exchange for goods. If someone were to pledge to him 10 dollars, he would promise to give them one digital download of a song he had yet to release. This way, he had not yet produced any music because he did not have the money to do so, but he could sell the music beforehand, to raise the money to produce it. It is a backward way to make capital, but it surely works for many groups and small companies.

Why To Do It
Crowdfunding happens in place of a loan or grant. It can be so difficult to get a loan form a bank or a grant from your university or another company. You have to prove your worth, and with the economy hitting rock bottom recently, banks may be weary to offer their money.
Plus, the housing boom just a few years ago led to people leaving their homes and not paying for them, which meant that banks lost money, which means that they are now pickier with who they lend their money to. Many people who lost their jobs in California and Arizona left their houses after only a few months or years of living in them, without paying for them. This has changed the way banks do business. It is now more secure for banks, but harder for you to get a loan.

You have to go through a huge process of showing your assets, and put yourself on the line all to get a loan at a high interest rate. Who needs that? With crowdfunding there is no interest because there is no borrowing. There is pledging that does not come through unless the project comes through. So whether or not you make the money you set out to make, you will be fine in the end.

A New Scene
Crowdfunding is popular among the college and start up scene. Many people use social networking sites that they are already a part of to advertise their ideas. Anyone from age 18 and up can use it, though, as a means to gain capital without going through a bank or administration. All of the bureaucratic mess can really frustrate your new business. So go with crowdfunding as a way to earn capital, risk free. If you do not earn enough, the money that people pledge never goes to you and you don't have to pay anything back. This means that you are back to square one, so develop your idea before presenting it to the public.

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