Crowfunding, the ideal solution to finance our projects

Crowfunding in Spain

Thanks to the new information technologies, such as the internet, a resource that probably represents the most momentous advance of the XNUMXth century, today all kinds of instruments can be used to pave the way in the competitive field of independent businesses.

In this regard, one of the options that have been on the rise in recent years is crowfunding, also known as crowdfunding or crowdfunding.

Just as the name might suggest, Crowfunding is basically a platform through which you can search or request a collaboration to undertake and finance projects of all kinds.

In simple terms, collective financing is a mechanism that allows you to request the help of other people, companies, associations or even institutions, that is, anyone who may be interested in making a donation, loan or credit in order to You can carry out an idea that you have in hand but that has not been able to give birth due to the lack of financial and material resources.

The history of Crowfunding

Actually crowfunding is a method that dates back a few years, even before the entrance of the new century. However, because internet access has gone global in recent years, It is when we have been able to learn about the large number of resources and instruments that we can access by means of a simple click, a situation that of course has also popularized the use of collective financing, a platform that traces its origins since 1997, when the British rock group known as Marillon used this method in order to finance their US tour.

Since then, with the accelerated internet growth, crowfunding has also been potentially expanding, as more people learn about it financing method for your projects and ideas. In fact, according to a study carried out in collaboration with the Complutense University of Madrid for an annual report for 2016, only in Spain, crowfunding managed to raise the amount of more than 113 million euros through its various platforms, which represented an increase of 116% compared to what was collected in 2015.

How does Crowfunding work?

what is crowfunding

As it is a crowdfunding mechanism, in simple terms, crowfunding works primarily from two essential actors: the entrepreneur who needs resources, and the small investor who is willing to provide them with the ultimate goal of receiving a certain reward in the not too distant future.

That is, we are talking about a platform in which both participants can help each other. Of course, the profits that can be received as a small investor in these businesses will always depend on the amount of the contribution provided, since when making a small economic deposit, on many occasions a sample of the financed product or articles, such as some promotional t-shirt.

The steps to follow to receive financing of this type are the following:

1.- A publication is made on the platform: This is where the essence of what you want to develop is basically located, because in the publication you will indicate what your project is, the amount you need to collect to carry it out, the plan you have to develop it and finally, the profits or rewards you plan to offer to people who contribute money to your cause; of course, the benefit they will receive must be in proportion to the amount they have contributed.

2.- Diffusion of the project and collection process: It is at this point where we will have to promote our idea to as many people as possible, thus making use of all the means at our disposal so that our project reaches the ears of any possible interested party, so it is vital that we make use of of applications and social pages, such as Facebook or Twitter to campaign for our project. This is important because it is in this part of the process that we will have a certain amount of time to raise the necessary capital.

3.- Financing obtained

Once the deadline for raising the requested capital has concluded, depending on the type of financing that has been registered, either the total of what was requested or the part that has been raised for us to start the project will be received. This depends on whether the “All or nothing” modality has been requested, in which it is necessary to raise 100% of the capital, otherwise, what has been collected will simply return to the investors' accounts. On the other hand, if the “Everything counts” modality was registered, then we can make use of what has been gathered up to the expiration date.

What types of projects are eligible for crowfunding financing?

Crowfunding types

The versatility of this form of mass financing, allows that practically any idea that you have in mind, can be a serious candidate to receive the funds that will allow its materialization to finally become a reality.

In this way, we can enter any business, product or service that comes to mind, to which we see a potential that has not been exploited or that can be of great use to people. In this regard, we can currently see all kinds of inventions that are proposed in crowfunding, which can be very diverse as they come from different sectors, such as blogs, newspapers, music, cinema, inventions, applications for telephones, video games, etc.

Anyway, we could say that Crowfunding is the ideal platform for future entrepreneurs of unknown origin, from which perhaps the great inventors of tomorrow can emerge.

What are the types of crowfunding operating today?

Depending on what we have in mind, we can choose to different types of financing, among which we have the following:

  • Business Crowfunding: It consists of seeking financing for the establishment, be it a business or a company. This is a great option to avoid the expensive loans that are usually requested from banks.
  • Solidarity Crowfunding: This option is used to raise money for charitable causes or associations that provide services of a social nature, such as NGOs, hospitals or various charities.
  • Music crowfunding: This option is excellent for financing emerging groups or artists, who require support for the production of a CD or video clip that can lead them to stardom.
  • Personal Crowfunding: This type of financing occurs when a group of people get together to support each other in carrying out recreational activities such as trips and parties, since everyone cooperates as each one has plans for a specific date. Ideal for people who are on the go and have a hard time saving for a hobby.

What are the advantages and disadvantages around crowdfunding?

This type of financing has many advantages through which you can obtain very good opportunities. Among the highlights that can be mentioned, is the large accumulation of capital that can be raised in a short time thanks to an accurate promotion or presentation of the project on which the support is desired.

Crowfunding

This is possible because it does not depend on a single person having faith in your idea, but through the various platforms that exist for crowfunding, one can reach practically anyone who is willing to invest in a small business .

Today's users accessing the Internet are a gigantic mass of people who browse all kinds of pages looking for new products and services.

That is a social reality of which crowdfunding It gets a great opportunity to continue growing and that is what makes it one of the great alternatives through which we can start our ideas and projects when we do not have the support of companies or the media to promote ourselves.

Another of the greats advantages in this type of platforms is that due to the multiple donations or investments that are received, the amount of money that is risked in a project is highly diversified and as a result, the losses are never fatal neither for the entrepreneur nor for the small investors.

Within negatives, it is important to mention that when investing in crowdfunding, it is difficult to try to ensure the completion of a project, Well, there are some occasions when the ideas that are presented end up not concluding or coming to fruition, so in these cases all the investment collected is lost, but as mentioned above, if you are a financier this does not have to represent an effect adverse on your economy, because the amount you would lose would actually be very small so it should not affect your finances.

For this reason it is suggested that when investing in a crowfunding platform never enter a very large amount because precisely this type of instruments were created so that people could access many donations together, and thus the assets of a single person would not be at risk.

Main platforms for crowdfunding

Here we share some of the best crowdfunding platforms so that you can find financing for your projects.

Kickstarter

It is one of the best platforms for crowdfunding in the world, a pioneer in the United States. It has distinguished itself for projects such as movies, music, games, design, technology, among others.

Ideame

It is the only regional crowdfunding platform in all of Latin America, which also has a presence in 7 countries. It offers direct support to entrepreneurs with fundraising campaigns that have an average duration of 40 days.

Goteo

This is another of the best platforms for crowdfunding. It is available to any company or person seeking financing for social, scientific, cultural, technological, educational or ecological projects.

Indiegogo

It is a crowdfunding platform founded in 2008, which is also one of the first sites to offer crowdfunding funds. Allows people to apply for funding for an idea, charity, or start-up business. Charge a 5% commission on contributions.

Ulule

In this case, it is a very important crowdfunding platform in Europe, which also has a subsidiary in Spain. All the campaigns offered can be translated into up to 8 languages ​​and to date, more than 21.000 projects have been financed with a value of more than 98 million euros.

Verkami

This is a crowdfunding platform, considered one of the most important in Spain. This platform is especially focused on designers, artists, creators and groups. Stakeholders have to meet the funding goal in order to receive the rewards.

Throw us

It is a crowdfunding platform in which all kinds of projects are admitted, no matter if it is a product or a service, however the project must have realistic goals and provide something of value.

Conclusion

If we have in mind an idea or project for which we see great potential, it is no longer necessary to resort to banks and expensive private loans to receive the financing we need.

Crowfunding has come as the ideal option because if our project actually has potential it is certain that we will be able to convince anyone to support our cause, and if on the other hand they do not receive the required approval, perhaps they are saving us from a financial disaster for sure.

Whatever the situation, crowdfunding is here to stay and will always be a great tool to consider to capitalize on our ideas.


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