As a start-up would you prefer crowd funding or the traditional funding models
Crowd funding is based on the concept that individuals can now invest in start-ups. According to the web definition from Wikipedia. Crowd funding (sometimes called crowd financing or crowd sourced capital), inspired by crowd sourcing, describes the collective cooperation, attention and trust by people who network and pool their money together, usually via the Internet, in order to support efforts initiated by other people or organisations. Crow funding claims that “the crowd” is a better source of financial support than traditional funding avenues.
Crow funding operates on a different relationship model between the investor and the start-up as compared to the traditional model. It’s based on the concept of charity or donations. Here the start-up retains full ownership of the project and the Investor receive nothing more than credits and a thank you gift item for supporting their efforts.
Websites such as GrowVC, Kickstarter are crow funding platforms. Many of these platforms run on a subscription model where the subscribers decide who should receive funding. Of course traditional funding requires start-ups to have a solid business plan and not just an idea. The benefits from a traditional funding model could also be advice, mentoring and connections.
So given that you have an idea and need a kick start what would you prefer to do, go the crowd funding path and hope people give you money or go down the traditional funding path where your idea may be debated and a share of your business could be taken. Each model has its share of pros and cons. It’s up to you to weigh up your options.
Either way if you are reading this post and believe to go down the crowd funding path, do the right thing and take money for adding value in this world. I wish you all the very best and hope that you are able to collect the funds required to kick start your next start-up.
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