What is crowdfunding and how can it fulfill our dreams?
Have you heard about the word Crowdfunding ? What type of funding is this and how is it different from general funding? If you are using social media, then you must have heard about this word "crowdfunding" at some time or the other.
This is a very innovative idea for any startup or company, or for any work that requires funding. And with the increased publicity of the internet, this innovative idea is able to reach more and more people with the help of internet, so more people are now joining it.
Crowdfunding is a very familiar name in the world of funding. Many people do not have complete information about it, so today I thought to give full information about the sentence "what is crowdfunding and how useful it is". so that you will not have to ask anyone else about it. Then without delay let's start and know what this crowdfunding is?
What is crowdfunding
The word crowdfunding is made of two words "Crowd+Funding". Funding refers to collecting money. So crowd + funding simply means collecting money from a crowd or a lot of people.
This is not a new thing, people have been donating small amounts from centuries to build temples and roads. You may have collected funds for Ganesh Chaturthi, Durga Puja, Holika Dahan, or any such festival in your area at some time or you may have collected funds for an NGO during schooling! It was all kind of offline crowdfunding.
An example of India's most successful crowdfunding is the 1977 film Manthan. 500000 farmers contributed Rs 2-2 to make it.
You may wonder what this good thing has to do with digitization?
So let me tell you that with the help of internet today people are raising money from people all over the world for various initiatives or personal benefits. And the process of crowdfunding or collecting funds was limited to a village or locality or city, it has now become a global phenomenon.
If you want to raise money for some work, instead of going door-to-door to everyone, you can put your talk in front of thousands of people on social media and motivate them to contribute to your project.
And are making this task easy world wide web i.e. hundreds of crowdfunding platforms on the internet.
What are Crowdfunding Platforms?
Basically, this is a website where money givers can connect to each other. On these platforms you can raise funds by running a campaign for your or someone else's needs.
What kind of work can we raise money from Crowdfunding Platforms?
Through these platforms you can raise money for things of different nature, for example:
1. For social work
2. To implement a business idea
3. To treat any needy
4. To help someone in studies
5. You can even collect money to travel abroad or to launch your album.
So they must be thinking that those who built such platforms on the Internet where you can raise money for your needs
Types of crowdfunding in India
If we talk about different crowdfunding then there are many types of crowdfunding in India like debt based, equity-based, cause-based, rewards based, software value token, donation based, litigation, etc.
1. Equity-based crowdfunding
In this type of crowdfunding, investors invest large amounts of money so that they can get big piece of equity in the startup. Most of the time equity-based crowdfunding is done for the growth of the company. This type of crowdfunding is considered illegal in India. SEBI (Securities and Exchange Board of India) is the only stakeholder who can frame guidelines to make it legal.
2. Reward-based crowdfunding
This type of crowdfunding is found very rarely. As you can understand from the name, the investor gets a tangible product in exchange for his investment. For example, if you are a startup of digital watches, then you have to reward your investors in the end as digital watches. It is completely legal in India.
3. Donation-based crowdfunding
In this type of crowdfunding, donors can donate according to their own cause for a noble cause. These donations can be of any amount. In the end, donors do not get any reward like it did in Reward based. It is completely legal in India. Here donors donate wholeheartedly for the good of our society. For example, Ratan tata who donate a lot from time to time.
4. Debt-based crowdfunding
In this type of crowdfunding, you invest in the security of the company (also called debt instrument) where your objective is to give your money to the company according to the loan and in return the company will return you the specified interest rate money. There are two types of debt instruments with secured and unsecured debt instruments. Interest rates are also typically associated with their level of risk based on any particular with startup or entity. It is legal in India.
5. Public-Private Partnership (PPP)
It is based on equity-based model, it is mainly practiced in India's crowdfunding.
What are the benefits of crowdfunding?
By the way, crowdfunding has many benefits, but I have tried to bring something important here in front of you.
1. In crowdfunding, due to no formal banking system, this process is not very dangerous.
2. This is a very efficient system and it takes very less time.
3. It increases the productivity of innovation and entrepreneurship to a great extent.
4. With the help of this, small industries can progress well if the right guidance is provided.
5. This makes the way of doing business policy very easy.
6. It has many applications such as this, very creative work such as blogging, journalism, music, independent film, and startup companies get funding for further work.
7. This is a very good way to return something to the society.
8. This allows creators to achieve low-cost capital.
9. More publicity, better customer base, and getting good employees.
10. It provides a good platform for people to donate and invest, so that the right thing can reach the right people.
11. It does not accept casteism and gender discrimination and looks at all people with equal view so that equality can be brought in the society.
12. This opens the door to good and neglected markets for individual investors.
13. Due to being investors here, the value of companies increases and with that they also add value to companies.
What are the demerits of crowdfunding?
Just like we all know that there are two aspects to everything, in the same way there are two aspects of crowdfunding, one of its benefits, which we already know, now let's understand what are its main demerits.
1. This is a bit risky for new small-scale investors and entrepreneurs and due to which they fail most of the time in this new venture.
2. There is also the danger of getting into the Reputation here, if the goals and targets are not reached in the right time, then it is not successful in generating interest, due to which it can also be a public failure.
3. Intellectual Property (IP) protection can also be an issue according to creators who engage in crowdfunding as they have to show their final product in front of the public beforehand which greatly increases the risk of its copying. Gives.
4. There is a risk in this that if the same network of supporters is repeatedly visited, then the campaign may not get the right kind of support, which can also become a big failure later.
5. Since it does not come under any regulatory framework, there is always a fear of misuse of it.
6. Since there is no formal banking system in it, there are more chances here that there is more fraud and money laundering.
7. There is also the risk of creditworthiness and enforceability.
8. With this, there is always a lack of expertise here because the ration of novice is less here.
9. As we know that the startup sector in India is still immature, so the chances of failure here are very high.
What steps need to be taken to collect money from crowdfunding ?
Step 1: Decide for which work you have to collect, how much money, for how long. And make its story around it. How you keep your point in crowdfunding is very important because on this basis people decide whether they are ready to help you or not!
Step 2: Select the right crowdfunding platform according to your purpose.
For this, you can visit the website of different crowdfunding platforms and analyze how many schemes have been supported there. Has anyone raised money there for a similar purpose? If yes, then your chances of being successful increase.
Step 3: Some information related to you and your fund raising goal will be asked on the website. Here you should be completely genuine and give correct information. Never give money for false information and for some hidden purpose. Good crowdfunding platforms investigate people running campaigns and can also take legal action against fraudsters.
Step 4: Create photos, videos, website and other promotional content related to your campaign and promote it through Facebook, blog posts and other ways.
Step 5: Monitor the campaign continuously and if any questions related to it arise, answer it immediately.
Step 6: And last but not the least, do not forget to say helpers THANK YOU.
How crowdfunding can be made successful?
If crowdfunding is to succeed completely, then there are certain points are given below.
1. Complete transparency and accountability to reduce Fraud and illigal activities.
2. Social media should be used to spread Awareness.
3. It should always be noted that the money reaches only the right people and at least people come in contact.
4. Documentation of all the details should be done correctly so that there is no misuse of the accumulated funds.
5. There should be laws in India to support crowdfunding and entrepreneurship.
6. People's attitude should change with regard to crowdfunding.
What to do if I want to pay for a project by crowdfunding?
If you are among those who want to give support by donating money, then crowdfunding is a good solution for you. You can simply go to any crowdfunding website and pay for your favorite project by debit card, credit card or other ways. Some websites ask you to register before making payment, while on some you can pay without registering.
The most well-known crowdfunding websites of India are as follows:
Ketto - This website is run by actor Kunal Kapoor. More than 10 thousand campaigns have been run on this. The campaigners on this website have to pay 12-14% of the entire amount as charges and payment gateway charges.
Milaap - In addition to donation crowdfunding (donation), lending can also be borrowed on solder. Overall, their fees are about eight percent of the entire amount.
Crowdera - This platform is operating in the United States and India and is preparing for its global launch. Its founders believe that a person engaged in a good job should not be charged. Due to this thinking, no service charge is charged from the campaigners on CrowdEra.
Bit Giving - In addition to social work, money can be collected for artistic interests and engineering projects on Bitgiving. NGOs charge 6% on this website and the rest 8%. For campaigns that fail, a 10% fee is charged.
FuelADream - Fundraisers all or nothing (complete or nothing) and Keep What You Get (keep what you get) on this website can choose from one of the options. Although their fees are 9% of the amount deposited, but about one fourth of the total amount is taken as service charges by adding 14% of the service tax.
Impact Guru - Impact Guru More than 100 camps on Impact Guru have been organized in 16 different countries. The fee of this platform is 10% due to contribution in international currency.
If you visit live projects regularly on these websites, then you can help many needy people. These are all popular websites and keep checking the makers of Campian. Therefore, if you help someone through these websites, then you can be patient that your money will be given to the right place and only the right people.
Apart from these, there are many crowdfunding platforms available in India. Through the Internet, all these platforms are working to make this world better with every project and now you too can be a part of this revolution.
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