Most common crowdfunding myths
5th August 2014
1. Crowdfunding is only about the money, money, money…
… But it’s really not! This is how crowdfunding differentiates from banks; crowdfunding’s first concern is solely helping the business grow and flourish. They support businesses by in effect becoming a business mentor to them. Crowdfunding is a brilliant marketing tool for businesses – they help them get noticed, potentially go viral as well as give valuable recommendations to the business – something banks fail to do.
2. So many investors to manage
The crowd investing into businesses are concerned about the business growing and thriving; they’re not looking to be managed. Another misconception is that if the business gives voting rights to the investors, the crowd will group up for control of the business. This would only occur if it was necessary to. Businesses should be concerned about managing their projects, not the investors!
3. Easy peasy crowdfunding
Everyone has read about successful campaigns that have come from crowdfunding, campaigns are put up and investors put their money in. What’s so hard about that? Well in actual fact, crowdfunding takes a lot of hard-work, a lot of execution and a lot of dedication. Most successful campaigns are those that appear to sell themselves, making it look easy. The perks of crowdfunding is that it will help validate the business to the investor; it is a self-propagating marketing technique and offers proof of concept. However, it is up to the business to utilise the valuable tools crowdfunding offers. The business needs to run away with the valuable tools crowdfunding offers. It should also be noted that businesses should be eminently aware of their social media. It’s not how much is on there, it is the importance of the content – quality over quantity.
4. All crowdfunding sites are the same
Be careful, they’re not! Different companies usually only offer one or two particular types of crowdfunding platforms. Make sure you go with a crowdfunding site that suits you and your business. ‘Anything can be crowdfunded’ is another misconception, not everything can or will be crowdfunded! It is up to the crowdfunding site to evaluate whether the project is worthy of investors’ time and money.
Crowd2Fund prides itself in being what it believes to be the only UK crowdfunding platform that offers the 5 different types of ways of crowdfunding: Loans, Equity, Revenue Share, Rewards and Donations. This will greatly improve the control and flexibility of how you raise funds and how you invest. Crowd2Fund also believes in complete transparency and states their fees in order for the process to be coherent and easy to understand.
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Whilst the P2P and crowdfunding industries are comparatively nascent in finance, many billions of pounds have already been invested through crowdfunding platforms. A recent report by Massolution predicts that global volumes for the market will reach $34.4 billion by the end of 2015. In spite of this, no central marketplace has been established.
Past performance and forecasts are not reliable indicators of future results. Your capital invested is not covered for compensation in the event of a loss by the FSCS. Tax treatment will depend on the individual circumstances and may be subject to change.