iNM Magazine Volume 7 | August 2015
Current Buzz
Manohar Peravali
First year, PGDM
NMIMS, Hyderabad
Swasti Verma
First year, PGDM
NMIMS, Hyderabad
disruption is the rising industry of crowd funding, which
involves a platform, an individual or entity in need of
funding, and a community of people willing to collectively
contribute these funds in exchange for rewards and
recognition.
Entrepreneurs have faced various challenges on the road
to success, in particular in regard to access to finance.
Raising capital for the business is one of the main
challenges. An entrepreneur is the only one who knows
the business idea to the core. Trying to convince investors
about something that does not exist is definitely a
challenge. Trying to make them understand that they are
trustworthy and equal to task is not a child's play
especially when it comes to starting a new business.
ere is more to raising capital than just asking for
money. More investors want to invest in already
established businesses and they want to be sure that they
will get returns for the risk they took. e European Union
is facing the most severe economic crisis in 50 years, with
the unemployed breaking the 25 million threshold. In this
context, new, fast-growing tech enterprises and web
entrepreneurs can play a key role in creating new and
sustainable jobs and, ultimately, in shaping the future
path of economic growth. However, difficulties in
accessing finance, increasing tax burdens and lack of
tailor-made policy support could weigh down especially
for young entrepreneurs, micro and small enterprises.
Now the question arises how can they be helped to
succeed in the current crisis?
Crowd funding does not necessarily need to be a
monetary funding. ere are several ways in which
people fund to support a cause or an organization. It can
be either business or charity or interest to develop a new
innovation. People work for hours for free at NGOs these
days to support a cause or a social activity. Similarly, there
are few noticed instances where people worked for few
startups and had taken some services from those
companies in return. e success rates of such startups
are also trending to be high in modern days.
Crowd funding has a lot of advantages. It hedges risk.
Starting up a company is a very risky and a challenging
journey. Besides finding sufficient funding, there are
always expenses that are impossible to forecast,
challenges in market validation, and other people who
want a piece of your venture in order to help get it off the
ground. Launching a crowd funding campaign hedges
these risks and serves as a valuable learning experience.
Crowd funding as it is today allows an entrepreneur to
gain market validation and avoid giving up equity before
going all out and taking a product concept to market. It
serves as a marketing tool. An active crowd funding
campaign is a good one to introduce a venture's overall
mission to the market as it is easy way to reach numerous
channels. Many crowd funding platforms incorporate
social media mechanisms making it painless to get
referral traffic to your website and other social media
pages. It gives proof of concept. Showing investors and
convincing yourself that your venture has received
sufficient market validation at