CROWD FUNDING- VARIOUS TRENDS OF FUNDINGS

Crowd funding!!! This word has got sudden prominence in the recent lights of Greece bailout episode. All you need to know about this buzz word is put up here..Is crowd funding only about raising money? Lets have some insights here 

Crowd funding is the practice of funding a project or venture by raising monetary contributions from a large number of people, typically via the internet. It was first coined in 2005 By Merriem- Webster during their study on trends of internet and online communication impact.

The crowd funding model is fueled by three types of actors

1.       The project initiator who proposes the idea and project to be funded

2.       Individuals or groups who support the idea

3.       Moderating organization (the platform) that brings the parties together to launch the idea.

According to the figures from Massolution’s highly anticipated 2015CF – Crowd funding Industry Report, Global crowd funding experienced accelerated growth in 2014, expanding by 167 percent to reach $16.2 billion raised, up from $6.1 billion in 2013. In 2015, the industry is set to more than double once again, on its way to raising $34.4 billion.

Many small businesses and entrepreneurs flourish and benefit from the aid of this industry. However, being successful in crowd funding is not as easy as it seems. It comes with a lot of effort and dedication, but if one puts in the necessary work, they can realize fortunes that go far beyond just the raising of money. Capital doesn’t come so easy to entrepreneurs these days. Without a doubt, the current business-funding environment is in need of disruption.

One such disruption is the rising industry of crowd funding, which involves a platform, an individual or entity in need of funding, and a community of people willing to collectively contribute these funds in exchange for rewards and recognition. The amount of money raised by crowd funding platforms during 2012 is expected to reach $2.8 billion, up 91% since 2011.

Crowd funding does not necessarily need to be a monetary funding. There are several ways in which people fund to support a cause or an organization. It can be either business or charity or interest to develop a new innovation. People work for hours for free at NGOs these days to support a cause or a social activity. Similarly, there are few noticed instincts where people worked for few startups and had taken some services from those companies in return. The success rates of such startups are also trending to be high in modern days.

Below mentioned are some of the high end crowd funded Projects.

CROWD FUNDING IN GREECE:

There is no doubt in saying that crowd funding concept is helping Greece a lot to improve their economic condition. Greece was on the edge of a deadline to pay 1.5 billion Euros back to the international monetary fund, and a crowd funding campaign called Greek bailout fund wanted to help. The campaign set up on the fund raising website Indiegogo, raised more than €1,930,577 which was not just an insignificant amount from a single source to pool up.

Crowd funding from many individuals who give small amounts has financed a number of high-profile projects in recent years. Some campaigns seem to be intentionally wacky— like the one in 2011 that raised $67,000 to pay for a RoboCop statue in Detroit — while others seek to make the world a better place.

STATUE OF UNITY:

One of the most famous examples of crowd funding/crowd sourcing is STATUE OF UNITY project. Though the motto of the project is not to collect funds but collecting Iron which is a prime raw material to build the project in which the main aim is to unite people together. The estimated 1^st phase of the project required INR 2900 Crores/- in which INR 1400 Crores/- for statue was raised through the crowd by putting iron materials and funds forward which worked as a PPP model.

STATUE OF UNITY project got tremendous response which made a huge impact on Indian politics as well.

ANTI SPAMMING MOVEMENT BY GOOGLE:

                The anti spamming movement of the Calfornia based U.S. tech giant, Google seeks support from the netigens to support the cause through which they can come out with better solutions over spamming activities and fraud detections.  Google wallet,  even though not so familiar concept known in the east, stands as a best example of practice through this movement.

ONLINE COMPANIES:

                Companies like Freecharge, Uber, Ola etc built their business models keeping the people in their key strategies.  Customers (say people) utilize the services of the companies at lesser costs by increasing the volume of the business through referrals and points system also comes under crowd funding as they are the key contributors to the business in developing the brand name of the companies. Even though the benefits are returned to the customers back, it can be considered as crowd sourcing for business expansion with few rewards and gifts as a token of gratitude and thanks to the one who put those gifts as utilization of the same companies’ services as their gratitude.

Apart from these, there are crowd funding activities like selling the old items to support the causes the people chose, lending the unused stuff to put into a store by a group of people in a group for better utilization purposes wherein which people use the resources for free and put them back in place once the work is done.

BENEFITS OF CROWD FUNDING:

It hedges risk

Starting up a company is a very risky and challenging journey. Besides finding sufficient funding, there are always expenses that are impossible to forecast, challenges in market validation, and other people who want a piece of your venture in order to help get it off the ground. Launching a crowd funding campaign hedges these risks and serves as a valuable learning experience. Crowd funding as it is today allows an entrepreneur to gain market validation and avoid giving up equity before going all out and taking a product concept to market.

 It serves as a marketing tool

An active crowd funding campaign is a good one to introduce a venture’s overall mission to the market as it is easy way to reach numerous channels. Many crowd funding platforms incorporate social media mechanisms making it painless to get referral traffic to your website and other social media pages.

It gives proof of concept

Showing investors and convincing yourself that your venture has received sufficient market validation at an early stage is hard. However crowd funding makes it possible. The first question that any investor will ask will often be along the lines of the proof of concept and the good way to gain some respect and credibility is to show them your venture had a successful crowd funding campaign.

It allows crowd funding of brainstorming

One of the biggest challenges for small businesses and entrepreneurs is to be able to cover all the holes that a venture might have at an early stage. By having a crowd funding campaign, the entrepreneur has the ability to engage the crowd and receive comments, feedback, and ideas.

This feedback is extremely valuable, as it can help understand some aspects of their business that were previously un-thought of. It could also potentially inspire some other ideas.

CONCLUSION:

There will be an exponential growth in these several trends discussed and much more trends exist in near future where robots are also coming into picture as robots funding the work hours of the employees which will be a spell bound scene for the past generations and the traditional approaches followers. So, is there anyone with a business idea and no capital? Welcome to Crowd funding era.