Frequently Asked Questions in GoWithFund.
Crowdfunding is a way of raising money, collecting funds, or gaining investment in small to large amounts from interested people, donors, and investors from all around the world with the help of the internet. Crowdfunding allows fundraisers to collect money for their businesses, social purposes, and charitable causes.
What are the benefits of crowdfunding?
- Crowdfunding helps business owners and fund seekers access capital easily by connecting them to a larger audience.
- Crowdfunding can help develop a community of like-minded people, investors, and business owners.
- Non-accredited investors can also invest in businesses through crowdfunding.
- It avoids the hassle of applying for loans and other traditional methods of gaining investments.
Crowdfunding sites work as the bridge between fundraisers and the public. Fundraisers can share their pitch or cause including their financial goal, and if the crowd believes in their pitch/cause they can contribute what they can.
Most of the crowdfunding sites are all-or-nothing meaning if the seeker reaches his/her target, they can access the fund, and if not all the funds go back to the respective investors.
Donation-based crowdfunding does not need to be paid back. However, in exchange for capital, artists and business owners give incentives like access to gated creations, limited products, presales, and sometimes equity in exchange for their investments.
Yes, crowdfunding is legal and is a great way of raising capital for your businesses or funds for other charitable causes.
Why is crowdfunding expensive?
Crowdfunding is a less expensive method of raising funds, where sites charge you no fees if your target is not met. You only have to pay a certain percentage of your total collection as the platform fees, if you can meet your target.
To create a crowdfunding campaign, you first need to :
- Determine if crowdfunding is what you need
- List your goals for crowdfunding and expected budget
- Select a crowdfunding site according to your requirements
- Develop your strategies
- Create your campaign with the help of the site
Who can benefit from crowdfunding?
Anyone can benefit from crowdfunding. From fundraisers to small businesses, startups, and investors can benefit from crowdfunding.
Why do investors like crowdfunding?
Since equity-based crowdfunding is gaining popularity, not only accredited investors but everybody can invest in business. Investors can gain profits from their investments via crowdfunding in exchange for certain stakes in the company.
What is crowdfunding best for?
Crowdfunding is best to raise funds for those who need capital for projects, businesses, or even nonprofitable/charitable causes.
What are the disadvantages of crowdfunding?
The disadvantages of crowdfunding are:
- Fundraisers might not reach their targets
- The guarantee of success depends on your ability to promote your campaign
- May require more time
- Loss of equity
