is a way to finance your business through donations from the public.
This is often done through crowdfunding websites.
In general, publish your
business idea as a campaign with a description of your project on the website.
If people want to support their campaign, they can give money to achieve your
goal. On some sites, you must establish a monetary goal and timeline to achieve
To encourage people to
support your campaign, you can offer incentives and rewards based on the amount
of the donation. These incentives and rewards can be anything, such as: for
example, goods, recognition, discounts on the future purchase of the product
you develop, etc.
For example, you can
choose to have the donor confirm on the website of your product for each $10
donation. For each $ 20 donation, you will receive a 5% discount on the
purchase of your product.
Licensed companies can
also play the role of crowdfunding platforms. To provide a collective financing
service, accredited public companies must apply for a financial services
license to provide this service.
Benefits of crowdfunding.
The benefits of collective
financing compared to other sources of funding can be:
• A customer base who believes in your
• The opportunity for you to interact
directly with your customers, who are also your investors
• The ability to receive feedback from your
customers when you develop and test your product
• Free marketing of your mouth through its
• Despite giving to share to investors, you
still own your business
• Less commitment and risk (if you do not
reach your goal, you do not have to commit).
As with all financing
options, crowdfunding has drawbacks. These may include:
• They do not guarantee that you will
achieve your funding objective promptly
• The need to present your product, to
encourage people to finance it.
• You must spend time interacting with your
sponsors to provide updates on your product and business development.
• Reward your supporters for promoting
• The need to deliver the promised product
to its supporters.
Compete with other companies that seek collective financing for their ideas and
Legal issues about
Depending on the type of
business idea for which you collect donations, you may need to register to
obtain a license or comply with the law. The same can be applied to the type of
rewards or incentives you want to offer your finances. This is especially the
case if your business idea is a financial product, that could earn the
investors monetary rewards.