How Crowdfunding Helps Startups

Right from the conceptualization, accruing capital, convincing investors to steadily performing better, there are a lot of challenges that a startup faces. Not to mention, the volatility of its functioning environment, from a socio-economic angle and the level of access to resources it takes to keep a start-up going.

Startups struggle in a lot of different areas; funding, marketing, operations to expertise, you name it, and they have it. The curveball of learning is so tricky that a start-up had to pay a hefty price to survive, a price that involved multiple trial and errors, failures, doubts and issues. Ever since crowdfunding has entered the scene, the challenges on startups have reduced to a good extent. Crowdfunding has battled with a lot of these common problems that startups face. Despite being just a single avenue, it has provided solutions to a variety of problems that startups face.

1- Let’s talk finance

All the startups have to start somewhere. Funding is one of the most prominent problems that a start-up faces. Crowdfunding has enabled small-scale businesses and ideators to get access to funding. Traditionally, access to financing new ideas has traditionally been limited to certain geographical areas.

For instance, if we take the US, the access to finance is only available in areas around Silicon Valley and Cambridge City and if we talk about another country, say India, startup culture is prevalent only in certain pockets of the country. With Bengaluru being known as the start-up capital of India, the access to getting a start-up financed in Bengaluru beats any other city in India.

Crowdfunding has solved this problem by expanding beyond geographical boundaries. By leveraging crowdfunding for a start-up, the organization is able to involve people from any part of the world to believe in their cause. The access to finance is not centered on just urban pockets belonging to a city or a country, it transgresses beyond. This makes sure that if an idea is worth investing in, it attracts investors by default. Gone are the days when people would travel to urban cities and entrepreneurial conferences to network with investors. Now networking with investors is just a click away.

2- Let’s talk about equality.

 As the world chases internet connectivity, crowdfunding has been evolving to chase socio-economic gaps so that they can be bridged. Traditionally, with opportunities, some pockets of the population have been ignored in the past, be it due to race, language or gender etc. But with crowdfunding, a remote sense of equality has crept up, especially with the people who have access to the internet. Gone are the days when color segregation and race segregation determined your access to entrepreneurial opportunities.

With the help of crowdfunding, anyone in any part of the world can try their hand at starting their own venture. The only prerequisite has to do with the fact that access to the internet is mandatory. Only half the world population has access to the internet. However, it is positive to see the fact that there exists a sense of equality in the world of netizens.

3- Let’s talk community.

Right after one manages to get their startup financed, their support or resources stops and ends with the prime investors. In most cases, an average of 4-5 investors depending on the size of the startup, provide support to the team. But when you attempt to crowdfund online for your startup, your access to resources are endless. When you put up an idea and ask for your potential investors' funds, there is a scope for connection during that process.

Once an investor contributes to your idea, he/she feels passionate about the cause and believes in you. There’s a good chance they might have contributed because of the scope of the idea/ they might have a personal inclination or background that has to do with your idea/ they like your end product etc. Practically all reasons that might have made a person contribute to your idea boils down to genuine interest. As an ideator, one can capitalize on this genuinely to create products that resonate with your investors. An ideate has a whole virtual community at his/her disposal. Additionally, they also have the chance of being connected to the extended circles of their direct community. They virtually have an unlimited access to resources.

In a world that’s filled with increasing equality, crowdfunding is a single avenue that is routed towards a sense of equality. The scope of crowdfunding is definitely getting bigger day by day and hopefully, one day it bridges all sources on inequality in this world. Until then, ideators can aggressively rely on crowdfunding to access opportunities that one wouldn’t have dreamed of.