Thursday, 18 July 2019 12:00

What is crowdfunding and how does it support business development?

Crowdfunding is increasingly becoming a more and more popular trend to collect funds. You can get resources for any kind of activities this way - film production, book or records publishing agency, or curing ill people. How is that related to business?

Crowdfunding gains more popularity also in case of funding private enterprise projects. A number of startups use this form of collecting money merged with the classical model of obtaining investors or “angel investors”. Let’s, however, begin from answering a question - what is crowdfunding?

What is crowdfunding?

Crowdfunding is a method of gathering funds by community members for a set goal. It usually is a specific project, commercial or otherwise. Thanks to using crowdfunding platforms, the fundraising campaign is safer, more controlled, and can be expanded to a bigger scale.

crowdfunding_-_services

How to run a crowdfunding campaign?

The organizer starts the campaign on one of the platforms and specifies its goal or goals - a fixed amount of money that they want to collect. The participants can pay a set amount of money or any amount they wish, and they are often rewarded by getting a small gift in return - a gadget, access to a service, or a finished product. Once the amount is collected, the organizer can withdraw the money and update the participants on the campaign’s outcome.

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Source: Open Collective

Is crowdfunding effective?

The growing popularity of crowdfunding helps develop even large projects and has never been simpler. According to analyzes, crowdfunding has provided the global economy with up to 65 billion dollars!

It is estimated that the effects of 78% of crowdfunding campaigns exceed the original goal. In successful campaigns, an average of 7 thousand dollars is collected for projects development.

One of the most effective campaigns, which collected more than 10 million dollars in just 37 days, is the Pebble E-Paper Watch project. Almost 69 thousand people participated in its crowdfunding! The company still successfully operates on the market. Thanks to the fundraiser, it was possible to manufacture a watch that is simple to customize, can be connected to the phone and supports applications.

A crowdfunding project that almost everyone knows is Wikipedia. It has been operating on the market for many years thanks to donations from users.

Crowdfunding and business

Collecting money for a specific goal is most often associated with charity fundraisers or non-governmental organizations acting non commercially. However, more and more companies get support for their grander goal projects. More than 40% of money spent on crowdfunding goes to organizations and entrepreneurs.

Many companies receive funding from people involved in projects developed by these companies. It is most popular in the open source movement - not only do the developers write the code, but they also financially support organizations that release software. Thanks to that, the producers of free open source programs are able to keep improving these products.

We, as YetiForce, are part of the innovative open source movement and we make the source code of YetiForce available for free. We want to keep improving, trying to ultimately become the best CRM in the world. Help us reach our goal!

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