10 reasons why crowdfunding is growing- Business News
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10 reasons why crowdfunding is growing

Crowdfunding as a concept can be traced back to at least a century and a half. However, in the modern method of crowdfunding, there is an online platform that acts as a mediator between those seeking funds and those wanting to invest.

BT Online   
  • New Delhi,  August 31, 2016  
  • |  
  • UPDATED   17:09 IST
10 reasons why crowdfunding is growing

Crowdfunding as a concept can be traced back to at least a century and a half. However, in the modern method of crowdfunding, there is an online platform that acts as a mediator between those seeking funds and those wanting to invest.

It gained mainstream visibility and greater acceptance, especially in the US, with the launch of platforms like Indiegogo (2008), Kickstarter (2009) and Microventures (2010).

It would be accurate to say that modern crowdfunding platforms are less than a decade old globally and even younger in India. While there are competing claims to being the first crowdfunding platform in the country, none are older than five years.

Here are 10 reasons why crowdfunding is growing:

  1. For relatively small sums of money, crowdfunding offers access to a bigger network of individuals through an online platform.
  2. In most cases, cost of raising funds is also lower compared to conventional mode.
  3. Raising money for causes is most effective and efficient on crowdfunding platforms.
  4. Most pitches and appeals on crowdfunding platforms are pre-vetted and curated, and thus a boon to investors.
  5. Entrepreneurs find it easier to ask for money on crowdfunding platforms.
  6. Since the money raised is spread over many investors, risk is lower for them. For entrepreneurs inventory requirement can be forecast and its cost may also become lower.
  7. A successful fund raising is at least a partial validation of the idea behind the enterprise.
  8. Campaigns on crowdfunding platforms also provide increased visibility of product or a service.
  9. One gets real-time feedback when raising money on crowdfunding platforms.
  10. Since most platforms insist on full disclosure, it helps improve accountability.