What Is Crowd Funding?
Tip jars, sponsorships, donations, micro patronage - it is known by many names. No matter what you call it, it all comes down to individuals providing direct financial support for the work of others through contributions over the Internet. In one form or another, crowd funding has existed since the beginning of time. However, the Internet has taken things to an entirely different level.
NB:If you want to know more about commitment or you can't read this article ,i will be giving out free Ebook to my readers >>Click Here<< To get it.
SPREADING THE WORD THROUGH CROWD FUNDING
Crowd funding may be something as modest as an anonymous donation button, or it may include thank you gifts, special privileges, special recognition, etc. However, it always consists of a few key factors, such as:
- Patrons may contribute as much as they may like, whenever they feel like it.
- If wealthier patrons want to contribute additional funds, they may; no money is ever left on the table.
- There are minimal intermediaries, with contributions going directly to the proposed beneficiary.
- Spread of content far and wide is encouraged without restriction, just as long as the opportunity to make contributions remains intact.
- Supporters are able to make a real difference by funding work about which they are passionate.
Crowd funding works closely with social networks and other online communities to raise necessary funding. In order to collect the finances that you need to support your project or idea, you do not have to worry about collecting names and email addresses to form your own new group of supporters.
You can promote your ideas to a community that already exists. More often than not, a crowd will form suddenly from dissimilar groups all around the world. These groups consist of people who just happen to all have an interest in contributing funds to a particular event, project, campaign, person, etc.
The greatest advantage to using the Internet for crowd funding is that it makes it possible for information to make it all around the world, effectively increasing awareness for the idea in need of financial support. A crowd-funding network is capable of assembling and disassembling at any point in time. This is the main variance between crowd funding and traditional co-operations.
THE INFLUENCE OF THE CROWD
The influence of the crowd is a major factor in crowd funding. Crowd psychology often plays a role in the failure or success of a crowd-funding campaign.
Crowd psychology is a form of social psychology. Regular people are generally able to gain power by acting as a group. It has been shown through history that big groups of people have brought about sudden and dramatic social changes in a way that sidesteps traditional due process. In addition, crowds working together have also been able to provoke controversy.
Social scientists have come up with a number of different theories to explain crowd psychology. In addition, scientists have also come up with several different theories regarding the way that crowd psychology is different from the psychology of the individual within that crowd.
Sigmund Freud had a crowd behavior theory. He believed that people in a crowd act differently than individuals. His theory was that the minds of everyone in the group merged to form a new way of thinking. The enthusiasm of each member of the group would increase, and he or she would become less aware of the nature of their actions.
One amazing social phenomenon that happens within a crowd is communal reinforcement. Communal reinforcement is an idea or concept that is asserted repeatedly, even when there is no firsthand evidence to support it. As time goes by, the idea or concept becomes reinforced into becoming a stern belief in the minds of many people and can often be regarded as fact by members of the group.
Many times, the idea or concept can be reinforced even further by mass media publications and additional means for communication. The tendency to accept an idea that is communally reinforced without question is a common occurrence. Communal reinforcement is a positive force that is incredibly beneficial to any crowd-funding campaign.
Online crowds come together virtually. They act and behave collectively, producing effects that would not otherwise be possible without the Internet. The dynamics of online users make it possible to make money with little effort involved.
EXAMPLES OF A CROWD-FUNDING CAMPAIGN
Politicians use crowd funding, charities use crowd funding, and even for-profit entrepreneurs are taking to the Internet in order to collect small amounts of money from many different supporters.
Combine social networking with capital accumulation, and you have crowd funding.
Click here to get the crowd-funding guide ebook for free
Start-up companies cannot offer the crowd equity in exchange for their financial support without filing with the SEC. Therefore, crowd-funded ventures are designed to be membership organizations. For example, a $50 donation will get you into the club, under the agreement that the crowd will be given a chance to vote on business decisions. In addition, the crowd is rewarded with points that are redeemable for products in place of profits. Crowd funding for start-up companies is basically a fan club that is centered on the business.
Primarily, crowd-funding projects open up new opportunities. As a company, you will be able to communicate more directly to your contributors and cut out all of the intermediaries, especially for specific projects. In addition, you will also be able to liquidize objects that are more abstract.
The Difference Between Investors and Contributors
Crowd funding is a completely different model for financing a start-up. With crowd funding, there is a different sort of relationship between the person paying the money and the entrepreneur with the idea.
With most, yet not all, crowd-funding sites, start-ups keep total ownership of their projects. Contributors are rewarded with credit on a website, commemorative t-shirts, free subscriptions or software copies, and more. The biggest difference here is that there are no stock certificates, no Board of Directors, and no equity to pay.
While crowd funding does give the funding that they need, start-ups funded this way may miss out on some things that investors have to offer, including business advice and connections. In order to get investor backing and to take advantage of their connections, you typically need strong connections in the first place. This is just one more reason that the Internet is the ideal way to raise money through crowd funding, because it is so easy to make connections online.
An Alternative To Business Start-up Loans
Naturally, every entrepreneur with a dream and a business plan thinks about taking out one or more business start-up loans in order to get his/her idea up and running. Aside from the obvious risks, many people think that there is no good reason that is preventing them from taking out a business start-up loan to get the money that they need.
Borrowing money through a business start-up loan is dangerous enough to get even the most dedicated entrepreneurs nervous. If it all works out in the end, that is awesome. If not, however, you may be in big trouble. Before you know it, you will be swamped with personal debt, insolvency, or possibly even bankruptcy.
Business start-up loans can give you a huge leg up when you start out, but if you can get around taking out a business start-up loan in the first place, then you should try an alternative strategy.
Read more resources on http://crowd-funding-sites.com/blog
0 Comments