Fresh ventures have begun to observe that crowdfunding can be used to fund their venture because of its rapid growth. It offers entrepreneurs the funds they need for a venture or a project.
The funds are collected through the combined efforts of family, friends, consumers and private investors. There are numerous platforms for crowdfunding along with websites that can be used by investors to make contributions to the project they have chosen. The objective is to raise significant amounts of money by small contributions from different individuals. Green businesses will find the idea of crowdfunding appropriate for their requirements.
UNDERSTANDING THE ALTERNATIVES
The approach used by crowdfunding is radically different when compared to the traditional funding options for new ventures. The alternatives to crowdfunding will be available in the form of personal funds, venture capital firms and angel investors and financing from banks. It must be understood that not all businesses are suitable for raising funds via crowdfunding. It is therefore essential to consider several options in order to find the best fit with the objectives of your business.
THE BENEFITS OF CROWDFUNDING
The business idea or the proposition will determine the success of any crowdfunding initiative. As more people are becoming eco-friendly they are showing more interest in providing support to green businesses. The option of crowdfunding may be the premier option for your green business if you can satisfy the following conditions:
- You have a clear story in your possession which is intriguing.
- You are in a position to explain why people should contribute money to your green business.
- You have a description of what you are trying to achieve for the society and the environment and the type of funding that is necessary.
Utilizing the crowdfunding approach will also expose you to several other benefits. It can give your new business venture the exposure it needs to investor pools which are diverse as well as help you to validate the concept of the business with support from the crowdfunding. It can also be a major platform for promoting and marketing your concept.
After you decide on any of the popular platforms for crowdfunding you will have access to a large number of individuals that are interested to invest in the ideas which capture their interest. If your business idea is intriguing you will have an easy time to get people interested to contribute. If on the other hand, your idea is ordinary you may find it difficult to generate the funding that is required.
Before you decide to launch your green business your followers on the crowdfunding platform will have information about your business because the initiative was taken by you. The information with your followers will make it possible for you to get your business off to a flying start. Initially, you will receive comments and ideas from investors that are interested. They may want to suggest how your business can do things differently from the idea you had proposed during the introduction of your business. Therefore you get an opportunity to improve on the business idea you proposed.
TYPES OF CROWDFUNDING FOR GREEN BUSINESSES
Before you decide to register on any crowdfunding platform it is important for you to know about the different kinds of crowdfunding which is presently available. The three most popular types include reward-based crowdfunding, donation-based crowdfunding, and equity-based crowdfunding. Investors or contributors in donation-based crowdfunding receive no financial benefits while individual contributors receive some products or services in the reward-based crowdfunding. The contributors will become part owners of the business in equity-based crowdfunding because they can exchange their capital for equity shares.
The nature of your business will determine what kind of crowdfunding is suitable for your new venture. Your chances of getting significant funding via a donation-based crowdfunding will be enhanced if your green business idea is talking about a nonprofit business. You will need to explain the kind of positive environmental impact your business can create, if you intend to do well on a donation-based crowdfunding platform. If you are unable to do so you may as well begin with the other options which could be in the form of reward based and equity-based crowdfunding. If the capital needed to start the business is significant your best options will rest with equity-based crowdfunding because many instances have been observed where people have raised in excess of $50,000-$10 million via this platform.
MAJOR CROWDFUNDING PLATFORMS FOR GREEN BUSINESSES
You will come across approximately 500 crowdfunding platforms over the Internet and some of the best crowdfunding platforms online for green businesses are Indiegogo, Fundly, GoGetFunding, StartSomeGood, EquityNet, FirstGiving among others.
It is rather unfortunate that a popular crowdfunding platform like Kickstarter does not have a section for green businesses. However, you can keep a tab on this site to understand whether they include the relevant section in the future.
If your idea is intriguing you can rest assured it will become a success story just as other green businesses successfully managed to raise funds via crowdfunding. A business selling domestic electricity storage devices in the UK promoted campaigns for crowdfunding and raised over £150,000 in 2014 and £700,000 in 2015. You will find numerous examples of successful campaigns by green businesses that used crowdfunding platforms. If you are successful in harnessing the support from various individuals they can help to ensure your vision for a better world and a better business.