Topic > Starting a New Business: Crowdfunding - 751

To start a new business of their own, people take a step back for one main reason: “funding”. Despite having a very clear picture of what business to start, naive people have their concerns about how to start. One such solution to this problem is “Crowdfunding”. This method helps raise funds for new businesses started by collecting small amounts of funds from a large group of people over the Internet (Turban, Volonino & Wood, 2013). In the beginning, crowdfunding was used by charities to raise money. Since the main challenge in starting a new business is “Finance”, crowdfunding is used in several ways. For any small or new business you start, getting a loan from the bank is undoubtedly not easy. In such situations crowdfunding began. A good example of crowdfunding is Kickstarter. “Kickstarter is the largest crowdfunding site in the world for creative projects.” Individuals or groups of people who wish to start a new project should upload their own video that actually explains the overall goal, content and funding required for the project (Turban, Volonino & Wood, 2013). In this way, the public (visitors) decide whether the projects are really worth their investments. So, it can be treated as a social commerce. Investors receive additional benefits such as t-shirts and concert tickets. Furthermore, when an investor invests a certain amount in the project and when the deadline is met, he checks whether the necessary amount is reached or not. If the target amount is not reached, all contributions are returned to the investors, if the target amount is reached, the project is ready to start and the amount is credited to the project creator. Crowdfunding is growing rapidly in sectors such as charity, music, gaming and many more… strategies are implemented by independent filmmakers to obtain the necessary funds. Here investors are rewarded by receiving gifts such as premium screening tickets or DVDs of the final film. The funds raised using crowdfunding could be sufficient for the pre-production process or to promote a film and thus become part of the financial source in film making as well (Braet, Spek & Pauwels, 2013). To conclude, crowdfunding is an internet-based method where small amounts are raised by a large crowd for a cause. Support various fields such as music; arts etc., however in fields like film making crowdfunding can only help part of the funding as this field involves a lot of funding. In today's world crowdfunding is having a greater demand and is useful for people who want to create a project or new business by contributing funds.