Crowdfunding is one of the unique ways to raise funds. It is an estimate that the crowdfunding industry is over a $34.4 billion dollars. This, in turn, makes it one of the effective ways to raise funds. However, It has got certain misconceptions that need to be shed light on.
Top 10 crowdfunding myths busted!:
1) Crowdfunding is free:
The answer is a big NO. Nothing in this world is for free, the same case with crowdfunding as well. Crowdfunding is not free. It is cheap or rather affordable, but not free. It is, however, cheaper than other methods of fundraising. There are various crowdfunding sites online, via which anyone can raise funds for their cause. These sites have certain charges like the platform fee, by which they take a portion of your funds raised. It is one’s duty to do a thorough research before choosing a platform which has very less platform fee. Few websites are known for their shady practices and have hidden charges. Crowdfunding websites like Milaap have a good reputation and have a tiny platform fee.
2) It is Simple:
Nothing in this world is easy. There’s a price for everything. Athletes workout day and night to be the best in their sport. Similarly, crowdfunding requires a lot of planning and it’s not easy as it seems to be. There have been many failed crowdfunding campaigns, it conveys two things, either the product wasn’t up to the mark or they didn’t have a proper crowdfunding strategy. In fact, all the popular fundraising campaigns have one thing in common, that is the amount of planning before launching a crowdfunding campaign.
It is tough to find a good team, organize and plan, but, that’s what crowdfunding is. A proper plan can make a lot of difference.
3) It’s fast:
Patience is required to achieve success in any field. So, does in crowdfunding. A lot of people have this misconception that crowdfunding is the fastest way of raising funds. It is true in one way, as a fundraiser one has to set up a target. But, a proper plan surely does take a lot of time. It roughly takes around 5-6 months of planning and building an audience before launching a crowdfunding campaign. Many of the crowdfunding campaigns have reached their goal within hours. It is all due to their strategy which took a lot of time. One has to keep in mind that no two crowdfunding campaigns are same.
4) The crowd is ready:
The crowd is never ready. A good fundraiser always tries to build an audience months before the launch of the campaign. It is important to do that. Then come the family and friends who are ready to contribute their money. After that, people get to hear about their campaigns in the press, which leads them to the crowdfunding page, where they read and donate.
5) The Press is waiting for you:
If it’s a big campaign, there’s no need to hire a PR firm. If it’s a big campaign, then the company surely needs to hire a good Public Relations firm. The job of the PR firm is to bring in the media houses. Everyone thinks that a media house will spot and publicize their campaign just because it is crowdfunding. But, No, It requires connections with editors and no one can do this job better than a PR.
6) Launch it Now!:
Entrepreneurs usually get advice about how the market is booming right now. And how this is the right time to launch the crowdfunding campaign. Many entrepreneurs hurry up and launch it only to face failure in the end. A crowdfunding campaign requires months of planning before it is launched. That is why launching in a hurry never helps.
7) A good crowdfunding campaign is determined by its first 48 hours:
This may not be true in some cases. There have been many campaigns in which, the campaign was almost dead until 3 weeks and after that gained sudden traction. People start coming in and contributing towards the cause. So, If your campaign is not generating funds in the first 48 hours, there’s no need to be depressed.
8) Longer campaigns are the best:
This may not necessarily be true. There are a few crowdfunding campaigns which have hit the target in just 45 minutes of the launch of the campaign. But, the main goal is to spread the word about the product to as many people as possible. A typical crowdfunding campaign spans about 8 to 9 weeks. Longer campaigns are exhausting as one has to keep on track with the press and the backers by replying to all their queries. It becomes difficult.
9) Money is the best thing crowdfunding offers:
A crowdfunding campaign is not only used to raise funds but to attract new customers towards the product. That’s the benefit of crowdfunding, as it also adds value to the present customers. Crowdfunding makes people aware of your cause, and your brand is known to many new people.
10) Crowdfunding and angel investments are the same:
They are not the same. One has to understand that in angel investing, one invests their private funds into the company in an exchange with equity.
Whereas in crowdfunding, people believe your product and your idea and raise funds to help you launch the product in the market.