Crowd. Funding. Crowd. Funding. Crowd. Funding. Does it need to be explained? As its name suggests; crowd funding is a way to raise revenue by allowing a large crowd to fund for you in small amounts per person. Crowd funding is commonly used by innovators, musicians, writers, filmmakers and many others in the creative arts field. This broad topic was discussed and debated upon in our week 10 CIU class and in my todays blog I shall briefly explain when is it most commonly used, how crowd funding works and if its beneficial or not.
Crowd funding is a method of raising finance, almost always used for a new venture or an up coming project, by allowing large amounts of public to share few amounts of capital; overall a large, large amount is often collected. This process is an online process where there are websites which work as mediums to help you post your promotion and allow people to invest in your upcoming product or service. “There are numerous donation crowd funding platforms where entrepreneurs can safely ask for capital such as Kickstarter, Indiegogo, RocketHub,” (Prive, 2012).
The biggest advantage of crowd funding for an artist is the funds that they have collected but crowd funding has many more advantages, such as said by the employees of The CrowdFunding Formula, “The crowd funding community is also very vocal. They’ll tell you what they like about your product and share their ideas for improving it,” (The CrowdFunding Formula, 2016). A major, major drawback for crowd funding is the all or nothing formula, “Most crowd funding platforms use the “all or nothing” model, which means even if you are a dollar short of your target you will end up with nothing,” (Jenson, 2014), an amount as small as a dollar can cause this operation to fail and have the artist left with nothing plus have lost a lot of time, effort and reputation. Furthermore the value of time is not appreciated as, “If a business owner needs a lot of money quickly, he may not be able to wait for the idea to catch fire on a crowdfunding site,” (Arora, 2012). Despite its few advantages, I believe crowd funding is not a fun process as it has high levels of risks; but if calculated and used correctly, you could receive high returns.
Arora, R. (2012). 7 Reasons to Avoid Crowdfunding. Fox Business. Retrieved 5 April 2017, from http://www.foxbusiness.com/features/2012/10/23/7-reasons-to-avoid-crowdfunding.html
Jensen, T. (2014). The Disadvantages of Crowdfunding. The Startup Garage. Retrieved 4 April 2017, from https://thestartupgarage.com/disadvantages-crowdfunding/
Prive, T. (2012). Forbes Welcome. Forbes.com. Retrieved 7 April 2017, from https://www.forbes.com/sites/tanyaprive/2012/11/27/what-is-crowdfunding-and-how-does-it-benefit-the-economy/#7a6a135cbe63/
The Crowdfunding Formula,. (2016). 10 BIG Benefits of Crowdfunding. The Crowdfunding Formula. Retrieved 5 April 2017, from https://thecrowdfundingformula.com/2015/11/26/benefits-of-crowdfunding