What Is Crowdfunding?
Crowdfunding is primarily the opposite of the mainstream method of business financing. Typically, if you want to raise funds to start a new business or launch a product, you would have to pack up your business schemes, market research, and prototypes and then shop your ideas around to a restricted pool or wealthy individuals or institutions. These funding sources include banks, angel investors, and venture capital companies, really limiting your choices to a few elements. You can consider this fundraising approach as similar to a funnel. For instance, you and your pitch are at the wide end and your trading audience at the enclosed end. Failing to the point that it funnels at the appropriate investor or firm at the correct timing, and that’s your time and money lost.
Crowdfunding scams
The days of donations and requesting loans from wealthy relatives are no longer in practice. Today, if you need boatloads of funds—whether it’s to assist you to cover a highly-priced emergency or to fund a new vocation idea—you only need to appeal to the large audience of the internet and be patient until the money starts to roll out.
Crowdfunding platforms such as GoFundMe, Kickstarter and IndieGoGo are loaded with enthusiastic to-be entrepreneurs and needy individuals. But they’re also complete with fraudulent individuals.
For instance, a woman raised thousands of dollars on GoFundMe for her daughter’s terminal cancer—which would be heartwarming if it were not for the fact that her daughter is completely healthy.
In another example, Triton’s American company claimed to have manufactured a device allowing people to respirate underwater. The IndieGoGo page they set up to pool funds for production brought $850,000 in just some days. Sounds interesting until you realize their supposed invention is more like something out of a sci-fi movie. In reality, Triton fooled many people with a story that only existed in their minds.
