“You don’t need to have a 100-person company to develop that idea.”
Finding funding for personal and business ventures has always been one of the more difficult obstacles facing emerging entrepreneurs. This is most true for newer and smaller businesses as well as inventors and creatives. With the increasing technological advancements, especially the advent of the internet, many entrepreneurs have found new ways to raise money for their businesses.
Crowdfunding, at least the term anyway, didn’t really exist until the 21st century digital age. There were certain mail-order subscription models that resembled modern day crowdfunding, but their impact had nowhere near the magnitude of contemporary internet-based crowdfunding. Since 2005 numerous online services have created platforms for entrepreneurs to pitch the early stages of their products to anyone with a computer. Most notably of these services are Kickstarter, Indiegogo, and GoFundMe, which have each raised over 3 billion dollars for successful projects.
Many of these services, such as Kickstarter and Indiegogo work on a reward-based platform, meaning that investors do not receive equity in the company they are funding. These rewards usually range from personal thank-you’s to early deluxe versions of the product. Because of the flexibility of these platforms, many of the businesses are helmed by creatives and entertainment entrepreneurs, with Games and Film being over half of Kickstarter’s total business.
Still, there are some web-based platforms such as Crowdfunder and Microventures that operate with equity models. And there are also sites such as GoFundMe and YouCaring that work on a direct donation platform, often being used for charity-based endeavors.
Many of the entrepreneurs operating with the crowdfunding business model likely would not be able to find funding in other traditional areas of financing, be it a lack of connections, unknown credibility, or living in a difficult location. Yet with crowdfunding and a solid pitch, entrepreneurs are able find early funding directly from their consumers. And with the rising popularity of social media, entrepreneurs have yet another platform to grow their potential ventures. The internet, even for the less experienced, has increasingly become a viable platform for all sorts of emerging businesses.
Kelly D. Scott
The world’s leading business advisory and executive coaching organization