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The first few steps into starting a business or company can be overwhelming. There is usually a lot of unknown uncertainty about whether or not it will be successful. Business financial needs can also be overpowering if not carefully planned for. Does every budding entrepreneur get to the point of ”will the company survive? Will I have enough funds to keep it going”?

Well, there is no secret in the fact that funding is one of the many reasons that business ideas never get to the implementation stage. However, while loans from financial institutions may not be the best option, this article explores the option of crowdfunding for startups.

What is crowdfunding, and how does it benefit businesses or companies?

It is purely a concept for raising money. It is primarily for businesses or companies at their early stages of operation. It is not only a simple concept, but it also comes with the flexibility of quick development. The good news is that it is online-based.

However, you must be able to present a business idea, which will support people and improve their lives. The idea is posted or launched on a crowdfunding platform, and its supporters can donate towards its implementation under what is commonly known as donation-based crowdfunding. The idea could be a product or project – related. Other types of crowdfunding types are reward-based, loan, and investment-based crowdfunding.

Notably, it seems like not many businesses are aware of the benefits of crowdfunding. The Alternative Board (TAB) Small Business Pulse Survey explains that just about 1% of business startups have been seeking financial support through crowdfunding. Nonetheless, the concept is quickly getting into the market, and most businesses are no longer using the traditional ways of raising capital.

Just like every coin has two sides, crowdfunding has a fair share of risks. Having a successful business is not guaranteed, so the chances of losing money are very high. You may never get any value from your shares, which means it would also be hard to sell them. Some of the crowdfunding platforms may also go bust before you can invest the money in the business.