Recently, there has been a rise of new type alternative investment management companies, known as crowdfunding. Crowdfunding has originated from traditional mainstream approach to business finance and helps to raise capital through the collective effort of friends, customers or individual investors. It uses social media websites like Facebook, Twitter or Linkedin to spread the news out about startups and to attract investors. If you are an entrepreneur and need capital to start business or launch a new product, first you must have a business plan, market research or prototypes of product, and only then you can try to sell your idea to angel investors, banks or venture capitalists. If you do not come to the right investors or firms, your time and money invested will be lost. Crowdfunding platforms give a possibility for new entrepreneurs to present their business ideas or products and get capital they need. As an entrepreneur you do not need to spend months of your time sifting through your personal network trying to find appropriate investors. With crowdfunding platforms you get an access to a huge network of private individuals who want to help to grow your business.
This alternative investment management solution has several benefits for everyone who searches for the funding:
Accessibility: with crowdfunding platforms entrepreneurs get access to thousands of accredited investors who can communicate, and fund their businesses.
Examination of the concept: as potential investors express their interest to a certain business, they start asking questions and giving remarks. If there is something wrong with the product or business it will be seen soon. Of course, entrepreneurs can quickly correct mistakes they did not consider.
Marketing: from fundraising launch day entrepreneurs can share their campaign through social media, email newsletters and use other marketing tactics. As their project is fully funded they can double or triple marketing expenses.
