One of the things that hinder innovation and business progress is finance. Many people have ideas but lack the funds with which to execute them. Some lose hope and drop their dreams while others sell theirs. There are those that go from place to place and from person to person to search for who will sponsor their projects and businesses. One efficient way of raising money to fund the execution of such ideas is through crowdfunding.
Crowdfunding is the act of raising a huge amount of money from a large number of people. It is usually done through online platforms. Crowdfunding is effective when there is a need to attract funds for new ideas and projects. It has also proved effective in funding projects that will solve existing societal problems. In Nigeria, humanitarian activities, especially those involving charities, are usually sponsored through crowdfunding. Start-up companies and businesses seeking expansion have also gained from this medium. What is more, investors here are not restricted by land borders because the events usually take place online. This means that through crowdfunding, beneficiaries can locate sponsors outside their countries.
Challenges of Crowdfunding
Crowdfunding presents a lot of benefits but it is not without challenges. The first difficulty encountered by people that opt for this method of fundraising is finding investors. Usually, social media platforms, such as Twitter and Facebook, are used for this purpose. You must have noticed where people call on the public to make donations towards sponsoring a project. For Nigerians, these calls are usually for charities and they are well responded to. Apart from using social media platforms, crowdfunding websites, such as Kickstarter, Naijafund, Fundanenterprise, Circleup, and so on help people to raise funds through many investors. Nevertheless, it is difficult to determine which of the channels provides access to good investors. Going for the wrong channel will make it difficult to attract the right investors.
As implied above, attracting the right investors is another challenge encountered while opting for crowdfunding. Ordinarily, novel ideas that can solve existing societal problems should attract many investors but that is always the case. Many campaigns for crowdfunding have been ignored despite how good and useful the intended projects were. Reasons for this could be because the entrepreneurs did not present their ideas in a clear and organised manner, which gave the impression that they are amateurs. Since no investor wants to invest in a business that might fail, they will overlook the request.
Furthermore, when the integrity of an entrepreneur or organisation is questionable, it will be hard for them to receive funds from the public. The third reason for this lack of response could be because the audience has no interest in the project(s). For instance, if an entrepreneur that wants to establish a language school starts a campaign for crowdfunding in a platform for medical practitioners, he will not attract much attention to his project.
Hence, for an entrepreneur to attract investors, he needs to capture their interests and present his ideas in an organised and clear manner. In this case, it is advised that he meets with crowdfunding experts, who could help him to achieve these.
- Don’t let finance stop you from achieving your goals. All you need is to conduct further research on crowdfunding and find crowdfunding experts that will help you communicate to the right audience.
- Find the right platform for the type of crowdfunding you are going for (article on types of crowdfunding will be published soon). Remember that using the right platform means you will meet the right investors. You can discuss this with your consultants or you can research the various crowdfunding websites and social media platforms to make your choice.
- It will be good to find out the type of projects and ideas investors have interests in. As mentioned earlier, innovative ideas may not capture the interests of investors. As a result, you need to know the possibility of your idea being interesting investors so you can make proper decisions before posting the funding campaign.
- Be patient. Remember it is not easy to release funds to people you barely know, especially when the integrity of many people are doubtful. So, give it time but be persistent. One more thing, nothing is as easy as it sounds. So, plan for hard work and disappointments.