Small Businesses and start-ups now have a real and relevant source of funding that doesn’t involve taking out bank loans or surrendering equity in their idea or venture. Increasingly, small businesses right around Australia (and around the world) are finding their capital requirements through Crowd Funding.
Crowd Funding, whilst largely unheard of in Australia, is the world’s fastest growing form of e-commerce, and represents a real and relevant resource for individuals and groups to raise funding quickly and easily from their networks. iPledg has made Crowd Funding simple by building an effective platform (www.ipledg.com) where project creators (businesses, start-ups, inventors and the like) can post a project and then engage their networks through social media, emails, and other communication to come along and make financial pledges of support – This seems to be working especially well for charitable causes.
“People tend to support campaigns because they like and have faith in the project creator or team, they are passionate about the project or the results the project will deliver, or they desire the cool, great value rewards offered to those who pledge” said Marketing Director of iPledg, Bryan Vadas.
There currently exists a considerable gap at the bottom of the funding ladder. Businesses after large amounts of money have the ASX on which to raise capital. Organisations on the next rung down can consider trade finance, bank loans, or factoring – all of which come at a cost. Government grants are available, but the bar is usually set quite high.
There has been nothing available to fund (at a reasonable cost and at low risk) what is just “a good idea” – that is until Crowd Funding.
Inventors are using Crowd Funding to raise funds to cover the cost of prototyping, establishing proof of concept, or securing their IP, whilst start-ups tend to see great value in running a Crowd Funding campaign to fund marketing campaigns, the launch of their business, or to contract in the skills and knowledge to plan and implement their business concept.
Whilst projects run on Crowd Funding platforms are best suited to funding targets of between $3,000 and $30,000, much larger amounts have been raised in this manner.
Established businesses are able to use Crowd Funding to come up with the money required for tools and resources to implement change, to grow the business, or for marketing initiatives.
Businesses have also been quite creative when it comes to larger projects that are best broken down into “bite sized” pieces that are smaller, more easily achieved funding campaigns and projects.
Businesses find running one smaller campaign for “phase one” of a larger program is a good basis for running their subsequent campaigns and, as such, use success to build further success. But ultimately the applications for Crowd Funding in small business are only limited by the imagination of the project creator.