Crowd funding is a great financing source for new startup businesses who have a limited budget.
Crowd funding is the process of getting funding from a community instead of an individual or finance institution. The network pools their money and resources to support the new business.
If you are starting a business you can post your project idea to the community. If the community sees your project and idea as promising, they give you the necessary funding, without any interests or collateral.
Crowd funding enables the small guys with big ideas to be able to secure funding to start their endeavor. Crowd funding originally started as a way to help generate funds for charities. It then became popular for artists, including street performers, before becoming a viable funding option for other small businesses.
In 1997 the British band Marillion even funded their entire tour through crowd funding. So since it’s original inception this funding vehicle has been used for a very diverse group of entrepreneurs.
Crowd funding is similar to angel investing as investors don’t require any principals returned or interests paid. With some crowd funding the business owner can even offer something in return for your supporters’ money.
Millions of supporters are active in crowd funding communities with money to lend.
The average loan amount is smaller. On average loan amounts are below $25,000, and in many cases loans are for even smaller amounts of $5,000-10,000.
Crowd funding is perfect for entrepreneurs who don’t have a standard business model that fits with normal funding. It is also perfect for new business owners who have great ideas and only need a little money to get going.
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