Crowdfunding a popular funding method
Crowdfunding, has been developing very strongly in recent years. At the beginning, crowdfunding was rather confined to artistic or cultural projects. Business crowdfunding is now booming and accounts for more than 70% of all funds collected.
The advantages of crowdfunding
Supporting projects that can not (yet) use bank financing
The first advantage of crowdfunding is, of course, the possibility for entrepreneurs to access financing for their project outside the banking system. Banks rarely finance start-up projects and they require guarantees and forward-looking documents that are difficult to provide at this stage of development. By appealing to a community of independent investors and proposing to invest a small amount, crowdfunding can raise funds quickly thanks to the multitude of investors, who individually take a risk limited to their contribution. Thus, the strength of crowdfunding lies in the number of co-investors that can constitute a significant capital for a given project from many contributions of a limited amount.
Developing communication around a project
Crowdfunding is also beneficial in terms of communication. In order to get users to invest in a project, we must first convince them and therefore present them and communicate on its evolution. But if they are convinced and if they invest in the project or the company, they become the ambassadors by making it known around them. Thus aside from the financial aspect, crowdfunding can allow a project to become viral and gain a notoriety that will facilitate its development.