Thursday, 26 July 2012 13:09

Raising Money - Reasons Why Crowdfunding is a Winner

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There have been a great many self made men and women throughout history. The true definition of being self made is "achieving success base on one's own efforts," which implies raising money and placing the wheels in motion was all completed by the individual. This is an admirable accomplishment to have attached to your name, but it just doesn't work that way for everyone.

There are many reasons why raising money by way of crowdfunding is a much better approach than attempting to go it alone or by raising money through your own limited efforts. Some of these are:

1. Time Required Before Startup
Whatever the reason is for raising money, there is usually a time constraint on when you begin. A new idea that can result in huge profits may only be good for a short time before similar ideas bring heavy competition. The social networks are good indicators of this very thing. MySpace began before FaceBook and enjoyed success until the heavy hitter was introduced.

Another reason why time is such an important factor is that some ideas, products, or even political aspirations are only viable for a short time. A politician can miss qualifying for office in an election because of only raising money on their own. The social acceptance or desire for some concepts or products has a lifetime too, and presenting something a year too late is often the difference between success and failure.

2. How Much Funding Can Be Acquired
Needless to say, there is much more clout with the many attempting to get money than the few. Crowdfunding is a successful way of raising money because those participating can be very far removed from your initial circle of friends. Before the internet and easy access to those with similar interests, it was difficult to find enough contacts to make a substantial goal for funding.

3. Interest of Investors
A lengthy campaign in raising money can lead to the loss of support from team members. If an idea takes a long time to come to fruition, it begins to look like a bad idea to investors, who may decide to go with seeding a venture that is ready to start quickly. An example of this would be the movie producers that are unable to raise funds for a project because it takes too long for it to get off the ground.

4. Focusing Your Efforts
If you spend all your time raising money, you will undoubtedly lose focus on what you really should be doing, which is making your project work. An inventor often has a great idea that has not been developed when beginning to look for capital. Too many late nights seeking funds will limit the progress of making the prototype work.

5. The Non-Mainstream Idea or Concept
Success stories abound of people with the forethought to venture into realms where others have previously been hesitant to go. Space flight would never have been possible if the great minds responsible for it had never attempted it and governments had not supported what most people thought was impossible. Funding might be impossible for what you desire through the banking system.

Any and all of these reasons are why crowdfunding is drawing so much attention and becoming the evolving choice for raising money. As important as it can be to go with crowdfunding, it is much more critical to choose the right support within the industry. Not every investment firm will pursue achieving investment capital in the same way as another.

Be sure to discuss your options and find out the stance of an investment firm beforehand. If crowdfunding is not ranked very high on their list, you might be better served by speaking with another firm.

Read 1283 times Last modified on Thursday, 26 July 2012 13:17

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