Crowdfunding: A Platform for Financing Your New Start-Ups

When you develop a business idea but can’t execute it because of the huge amount of funds need that you can’t afford, than crowdfunding is a very good source. Crowdfunding is a platform where individuals and businesses can collect money for their projects from a large number of people. It is a very useful source of financing for the new start-ups and entrepreneurs. You have to share your idea in a crowdfunding platform to attract investors and if the investors think your idea to be potential, they will invest in it.

Crowdfunding can be of four types:

  • Debt-based: Contributors get interest payments when the product is successful. Examples are FundedHere, CROWDO, MoolahSense
  • Equity based: Contributors receive shares in exchange for their contributions. Examples include AngelList, FUNDEL, SEEDRS, CAPBRIDGE
  • Reward-based: Contributors are promised rewards in exchange for their support; like first priority access to the product once it goes live. Examples include KICKSTARTER, indiegogo, ulule.
  • Donation based: Donations are charitable and usually tax-deductible. Examples include indiegogo, patreon, YOUCARING, FriendFund.

Crowdfunding is different from other traditional financing sources because you can collect big amount of fund from small contributions of a large number of investors.  Your brand gets promoted through the investors’ networks. You can also get important feedbacks and expert guidelines from the investors. Sharing your idea, you can also get to know public’s reactions about your product. A disadvantage of crowdfunding is that crowdfunding websites usually charge a good amount of percentage on the fund.

In Bangladesh there are only two local crowdfunding platforms: Projekt.co and Oporajoy.org. Among social media crowdfunding groups are Crowdfunding Association of Bangladesh (CAB), Crowdfunding Soft, Crowdfunding Bangladesh. Crowdfunding has not gained so much public acceptance yet though it has been more than 5 years since it entered in Bangladesh. Spreading knowledge about crowdfunding, proper government support and collective efforts are needed for greater crowdfunding adoption in Bangladesh.

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