By now every budding entrepreneur and almost every investor will have heard of crowdfunding. It is a source of alternative funding for start-ups and various business projects. It may include requesting and obtaining various sums of money from a large variety of individual investors, rather than from one or a few principal, formal sources.
The global crowdfunding industry is already vast with yearly exponential growth. It is estimated that in 2015, it was worth $34 billion. While stock investments are one of the best ways to secure a generous, steady form of passive income, investing in the right industry and the right platform is also crucial.
Here are the top five reasons why you should consider crowdfunding as an option when investing in stocks and even when investing directly.
1. It is extremely convenient
Navigating your way through the world of investing can be pretty daunting to a newcomer. This applies both to investor and entrepreneur. The entire process can be intimidating as well as extremely time and resource-consuming.
Crowdfunding platforms, on the other hand, simplify and streamline the process. There is no extensive talent scouting needed, little to no paperwork, or meetings required.
Millions of investors have access to millions of projects all in one platform.
Crowdfunding platforms and projects are extremely low cost and relatively easy to run, opening up a world of possibilities for entrepreneurs and investors who may have been more limited within the more traditional forms of investment.
2. Crowdfunding projects serve as proof of concept
The nature of crowdfunding projects allows them to act as a form of market research as well as fundraising. Because crowdfunding campaigns allow for real-time feedback and direct communication with the potential market for your project, you get to monitor the response to the project first-hand, to see what works, what doesn’t and exactly who your target market is.
3. Tapping into new potential markets
As we mentioned earlier, the traditional world of start-up investment was one that may have been more challenging for some to break into. Because crowdfunding platforms are easier and more accessible to everyone, this opens up a world of possibilities as well as new un-tapped potential markets, such as non-profit organizations and niche products and start-ups. For this reason, many experts consider crowdfunding to be a real game changer for those investing in stocks and new businesses.
4. It acts as funding and marketing in one
We have all witnessed the power of social media with Facebook and its 1.7 billion monthly active users, worldwide. Those who invest in stocks could not wait for the second Facebook finally went public as the business is currently worth almost $200 billion.
Crowdfunding platforms allow them to act as a form of marketing as well as funding. Successful projects rely on the power of popularity, marketing, as well as a strong social network and the loyalty of one’s supporters and social contacts.
So, crowdfunding reduces yet another cost- that of marketing and acquiring new clientele and interest, while sustaining profits.
5. It is an excellent platform for early-stage financing
When investing in stocks and businesses, you will come to learn that early stage financing is crucial. It allows you to tap in on something potentially rewarding at the right time, allowing you access to the lion’s share of the profits when it does go big.
Many startups use crowdfunding platforms as their form of early stage funding before venturing into further productive and formal sources of income.
So when next considering where to invest and not wanting to repeat these common investment mistakes, you may want to consider the world of crowdfunding as a viable investment option.
DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation in writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.
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