Are you a budding entrepreneur who has some business ideas or a business that requires some new infusion of funds? Do you have some business ideas in your head but cannot put them into action due to financial constraints? There are new ways to get funding apart from the usual visits to banks, VCs and angel investors.
Crowd funding is the latest platform for people to raise money for setting up a business, achieve a dream goal or even for medical expenditure. It has expanded considerably in the US and UK. It is slowly catching up in India. Let us wait and watch how we take benefits of this new concept.
First of all we have to understand that there is a difference between crowd funding and crowd investing. Crowd funding is a concept where people offer money to help your project on a financial basis. For example, if you want to launch a music album, you publish some snippets of your music on the Internet and ask people for funding if they like it. This form of funding is not an investment where people invest money and get back something like interest on the money or a share in the project. You should tell them how they would be rewarded. It can probably be some tangible/intangible returns like concert passes or music lessons. But of course, if it’s a charity project, people will not or cannot expect any returns.
Crowd investing is a different concept from crowd funding. Crowd financing or Crowd investing is when many investors come together to invest in a business/project/venture in exchange for some return in the form of profit sharing, stake in the venture or repayment of loan with interest.
The two most popular ones worldwide are Kickstarter and Indiegogo. Kickstarter is mainly in the US and UK markets and Indiegogo can be apparently used from anywhere as long as you have a bank account.
How can you get crowd funding in India?
In India, there are some crowd funding portals are like Wishberry. Wishberry allows customers to create a page for a gift registry or a campaign which needs to be funded. The page can then be shared with people who can contribute towards the gift/campaign. The campaign can be anything from an indie movie, charity cause or a dream vacation. People can contribute online using credit cards or debit cards. Visit Wishberry here for more details.
It is not easy to get funds with these concepts but it is an innovative way to fund projects that would otherwise have been canned. Moreover the legalities/ taxation rules also need to be clarified for these kinds of funding. #gettingyourich