How Does Crowdfunding Work & The Top 23 Websites To Use

how does crowdfunding workYou have been formulating plans up in your mind now for months about how to develop the next mouse trap and the ideas have finally come together for you! Now the next steps you’re thinking about is getting funding to buy the equipment to build a prototype of the product so more of them can be built in the future. The problem though is you only have $20 in your bank account. The great news however is you are totally pumped and excited about sharing the next best mouse trap with the world and getting this project of the ground. This is where crowdfunding comes in and learning how does crowdfunding work?

Before crowdfunding became popular, thanks to kickstarter.com (the pioneer in crowdfunding) people like you with a business idea to get funded would find a private investor or go to a traditional bank or credit union to get the financing needed. There are other ways of financing a project for sure such as selling equity in your business etc.. but for now we’ll focus primarily on the benefits of crowdfunding.

8 Major Benefits of Crowdfunding

  1. People’s demand: if your idea rocks and you can persuade others to see the vision of it and why it benefits them and their lives so much then the world is your bank…meaning the people will give you the money plus tips to help see your project or business get off the ground and have a chance to prosper!
  2. Ease: because of crowdfunding the process of getting funding is a thousand times easier. The clincher though always comes back to helping people really see the power of your vision. Using the power of technology to help convey your idea and/or project is critical now days.
  3. Low Risk: the risk associated with crowdfunding is a lot lower compared to having one investor front he capital for your idea/project. With crowdfunding hundreds even thousands of people put up the capital desired and hence the risk is diluted significantly.
  4. Insane Exposure: with the power of the internet you can introduce/market your idea to millions of people in a very short time period. If you idea strikes a cord in the hearts of people your project could be the next viral movement online! Compare and contrast this power with the effort it took to market your idea before the power of the internet was introduced to the masses!
  5. Scrutiny: at a glance this point might not sound too beneficial, but when you put your idea out there in front of people it automatically encounters the scrutiny of the masses; how many holes can I pick at this idea? Where does the idea falter? If you’re looking at this benefit the right way its HUGE. Imagine getting feedback from thousands of people about your project in a fraction of the time it would take you otherwise. Now take that feedback and improve your idea where needed.
  6. Validation: one of the biggest benchmarks investors want to see is that your idea has demand. In other words, investors, especially the big dogs willing to put in thousands to millions want to know that your project has a great demand. The crowdfunding sources I’ve listed out below are all sites that investors can visit to observe project with great demand. If people want the idea to come to fruition that’s a good sign for everyone especially investors willing to risk their capital for a greater financial reward.
  7. Raving fans: introducing a new idea that people absolutely love is pure awesomeness for entrepreneurs. It’s even better when those people turn into raving fans and start to spread the word for you. The power of word of mouth suddenly turns to your favor and now the question becomes managing and scaling growth.
  8. Pre selling: when you market your idea on one of the crowdfunding platforms out there you can gain a lot of prospects even customers willing to order larger amounts from you before you launch officially.

How to use crowdfunding

Here’s a fantastic TED talk that sheds some more light about how crowdfunding works and how you can get started with using the top crowdfunding websites I’ve shared below to help you launch your next idea or business project:

Top 23 Crowdfunding Websites

Here are some of the top crowdfunding websites to visit to help you raise capital for your business or project:

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