Crowfunding - worth it? Crowfunding Investment tips

6 Useful Crowdfunding Ideologies

Most modern day developers and property owners are considering crowdfunding, this idea was made due to most banks and financial institutions turned their request down.

And with the introduction of crowdfunding, it has become an option for them to pursue the potential business plan they have in mind.

The term crowdfunding is very popular and catchy because of its new generation nature, and to think that lots of established website has already been running on the internet for us to select.

Like you, we had our research with the platform and perhaps read review and attempt to select the best platform that offers a reliable customers service.

On our experience, after registering to a crowdfunding site, we have to wait longer before the system can initiate its sharing opportunities.

We also observed that there are non institutional small deals with a minimum investment ranging from $20,000 – $50,000.

The investments vary from different types in terms of the debt renewals. Normally the cash-flowing on all of the deals holds from three – five years with an average yearly return of 10 percent to 30 percent (we have heard some are getting much more, but to tell you the higher the riskier). The time frame given is enough in order to the product to get an income.

For most cases,

every donator is categorized by crowdfunding platform as single partner with limited entity.

The needed documents that will support the agreement are settled ahead of time on a person-by-person situation.

In fact, due diligence is important in the execution of the crowdfunding platform, the donator should examining the financial plan of the deal and the offering of the investment should be carefully identified before the approval process are being made.

As what we have stated on the first paragraph, majority of investors in realty are now paying attention in this new platform the crowfunding.

The standard return of investment pays around 4 percent.

Most of the companies uphold a low level of debt and expand risk by owning dozens of properties that are in the high grade classification of the overall business operation. For the record, every year the industry on crowdfunding almost double its size.

In the past, when an entrepreneur has an idea for possible business opportunity and did not have the needed capital to make the plan happen, loan from back was the immediate solution. Or even went to investors. You travel on places and open your idea, hoping that someone would listen.

Until today, creators and investors find their way pitching their mind to create ideas to attract investors, taking into consideration that these investors are not wealthy individuals or well established institution, they are just regular people like you.

Thanks to the idea of crowdfunding platforms connectivity, anyone and anywhere can become an investor to a certain project.

The idea of fundraising for those who are connected, the age of digital environment and this offers unlimited choice and control over the ideas that you will support.

The accessibility open to everyone, on the other hand, this creates an opportunity marketplace wherein one can support certain project.

And also this idea opens opportunity for cyber scammers and other related plans.

If you plan to get the support of other person online thru a fundraising campaign, take note some of the important factors that we will enumerate about crowdfunding platform before taking out your card!

1. Donation is donation

Just to make it clear, crowdfunding is a place where you request for possible donations. It’s money given without expecting something in return. It is not a hundred percent charitable giving, crowdfunding do not have tax deductions and they are not eligible to have one.

But if you are unsure about tax deductions, you can talk to your nearest tax professional wherein they will explain more about the topic.

Crowdfunding can be confusing for those who are unsure of what they are going to at this moment. Let me remind you that there are lots of campaigns that promise benefits in exchange for the donation you have done.

According to Federal Trade Commission, if the campaign was successful and the aim is achieved, you are then entitled to the promised benefit.

It is important for every donator to remember it, but in most of situation when you have support a certain crowdfunding campaign, this does not mean that you are buying something.

You are thereby providing support in form of funds to the business producer in order to support their capability to create their product plan in the market. And if the product is never made, there is a higher chance that you have given your hard earned money without getting in return.

So let me clear it again, “money is collected in a form of donation.”

Crowfunding worth it

Always do some research before entering this kind of platforms.

2. Never expect protection from crowdfunding platforms

When talking about crowdfunding platforms, there are plenty of them operating in the digital world. For sure kickstarter is the most famous among all, but to tell you, there are quite number of small crowdfunding platforms that support on specialized campaigns.

What we are telling you here now is about the function of these platforms in which it creates a bonding or relationship between the donor and the creator of the product.

In fact, every platform has its own standards for them to run the campaign, but the end point on all of those platforms whether small or large has the same goal.

They exist in order to connect to people who need funds for those who have extra money in their pocket, and pass the extra funds for them.

And if become a donor and instances that you have complain on the proposed project that you help, you should not expect something from the platform presented.

In short, make it a habit to read and understand the given terms and condition by the campaign before offering your financial support in terms of donation. So, if in case the goal in the campaign is not met, instances that you not get or you may get your hard earned money back from them.

Kickstarter platform has its known policies if ever the goal in the campaign is not met, all donors will get their money back. You now understand what kickstarter platform means. But other crowdfunding platform has its rules also.

Let us take for example “Indiegogo” platform, it does not matter of campaign goal is achieved. The money that is being collected was already taken in form of donation. Again, have extra careful in reading the campaign terms before deciding to place your donation.

3. Most crowdfunding campaigns fail

After a thorough study, we found out that kickstarter has the highest campaign standard compared to other platforms.

In fact,

total of twenty percent of all submitted campaigns were rejected and less than half of kickstarter projects meet its funding goal.

Percentage on crowdfunding sites is way lower than market based crowdfunding.

But crowdfunding in reality is extremely a crowded place, full of imaginative and energetic individuals that have no idea on how to increase funds.

And if you are looking at donation not as charity, so getting excited in the project is not enough for you, there is a need for you to verify the personalities who are involved in the campaign project.

You need to consider things, like there project history related to the new one or do they have a sound business model?

So if ever you will get their attention, consider things that make people that excited about their proposed project.

4. The difficulty backing out after the donation

Just to remind you that

  1. your donation is being hold by the platform until the goal is at hand, if you have plans to cancel the donation with the campaign platform.
  2. Or in the other hand, you funds has already been funded to the campaign producer, getting your hard earn money back will be difficult.

Let us take another crowdfunding campaign scenario, donation that has been made thru credit card and then the company failed to deliver the agreed terms, chances that you consider having reverse charges for getting your funds back.

But to take note, the request is normally made within the period of 60s days and this will take longer for a company to successfully complete its production or even fail to comply the production, so you will have lesser chances of getting back your money.

In other words,

use only your extra money for donation and don’t expect any in return, if situation happens positively as expected the better but in the end, donate at your risk.

5. Crowdfunding is a form of investment with low reward and high risk

So thing again all over and over again, this platform is high risk investment, crowdfunding has three varieties.

  1. First: the donator in the crowdfunding donates his money to an individual or certain company (this one is very popular among other forms).
  2. Second: crowdfunding donator or the investors operate as bank. They supply the needed money in form of personal loans.
  3. Third: the equity in the crowdfunding in which you buy new stock to a company that is still developing.

“P2P funding”

This is a “p2p” (peer to peer) funding and the equity of crowdfunding are made in a form of investment, the main expectation or objective is to get your hard earned money back.

Both risky, but considering equity in crowdfunding is dangerous, especially to the point that you don’t personally know the company that you are handing over your money. And even you did you homework, chances are still there for the company to fail and may result of leaving your money in the dark.

6. Scammers are all over the place

The title says it all, it says it all. The publicity of this platforms “crowdfunding” is high, making easy for criminals “scammers” abuse the good system. So getting aware should be your first priority.

That is the first thing that you should worry when thinking of crowdfunding, but for the record, most people started their crowdfunding platform campaign for good, only that they become overwhelmed to realize that delivering the promise seem impossible as they are not that equipped of doing it.

Again, always do some research and cautious enough before entering this kind of platforms.

It is not because someone used a reputable crowdfunding platform means everything is safe and legitimate. Considering if they made same pitch on you personally, what are the things that you need to know?

Crowdfunding is not to be scared if you know and have the right knowledge on how to use it correctly and the advantage of both sides.

Supporting a certain project has an impact to the consumers when the creation of the product has been realized by the people who ask for funding. The thing here is to understand to what you are getting in, before pressing the green donate button before its tool late.

Finale

It’s the fulfillment of the good crowdfunding is important.

Funding campaign done on websites is the most effective way in order for those who need capital for them to start the business plan or a new product in the market.

With this platform, it can also be a great way not just to introduce new product to the market, but it also allows you (business owner) to raise funds in order to build your dreams in reality.

In addition, crowdfunding campaign does not limit to products, everyone can raise funds for community event, books, film projects etc. with this system and your donator wants to see the results and the end product as quickly as possible.

So as owner, you need to bring in the stated product in the campaign to the target market and deliver it to the target customers in the shortest spam of time as compared the traditional way of raising capital when venturing with investors and capitalist.

Since the target is to deliver the product at the shortest period, working on a crowdfunding fulfillment becomes more dependable.

Remember what we have stated above “do your own research”.

This is the most important, work only with those reputable companies that can fulfill its stated campaign. Remember that when running eCommerce type of business, higher chances that you have lots of things to worry.

Things like product development, customer’s services and sourcing. And lastly is the fulfillment of the order. Fulfilling something in a company that does not suit on the type of business you run will cause more stress.

Make sure things are dependable, so if you do your business in Europe and North America, logistics can be a great help with your fulfillment needs in terms of eCommerce.

Now, how this work?

Simple, when a customer orders a product from website or company, the logistics will then help you out in the packing, picking and even delivering the purchased products to the customers directly anywhere it may be located.

Basically the products are store in China where the company warehouse is located, making a smooth transaction to the customers in terms of handling the product deliveries directly to the clients.

Surprisingly, there are logistics that are reputable and dependable in terms of fulfillment service for every eCommerce transactions and needs. Business owners can save lots of time and even money for them to maintain and control on the overall order process.

So with your kickstarter fulfillment and you want to make it sure that all logistics work else or else end up failing deliveries to your customers and keeping promises.

Every logistic system will monitor the inventory of your product real time, they will organize order in which it also reduce the overall cost of shipping, and validate address in case of possible returns and chargeback.

Notably after products have been ordered on your website/company, normally they want it to be delivered on them as soon as possible. So this is the reason why you enter into crowdfunding fulfillment system so that it will assist you with the delivery and logistics need for you to complete the order at the stated time.

The actual printing and the packaging is automatically scheduled to like what local carries do every day in order to fulfill the order and the product will be delivered on the specified schedule.

Maximizing profits is the major reason why businesses are created.

This is the main reason why you want your shipping cost becomes less, so it will not eat your potential profits.

Items with high cost in shipping has less percentage of getting ordered and would end up losing in your sales. So when you have run a crowdfunding campaign product for your desired product, make it sure that you partnered with a reliable logistic server.

When you disappoint your customer or the one who fund the project and having a feeling that they have been taken advantage and make them believed that you publicly collect funds thru a crowdfunding platform, your overall reputation could potentially suffer and likely to fail of your future campaigns.

 


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