Why should I crowdfund rather than seek private equity?

No matter what kind of project you’re trying to launch you’re faced with a question: how are you going to fund it? There are several options. Traditional routes include bank loans and venture capitalists, which without stellar credit, are a long shot for most. Loans, of course, require you to repay your principal with interest and venture capitalists generally want a large share of your business, which they can use to influence the direction of the company. However, there are now other routes to getting funded.

Angel investing and crowdfunding are often more viable ways to go for entrepreneurs, artists, and inventors. Angel investments offer essentially risk-free seed money along with the expertise of the investors. Unfortunately, as with venture capitalists, angel investors expect some say in the decision making process, which may mean partially or completely compromising your original concept. Crowdfunding avoids the activist investor problem.

Crowdfunding has advantages no other form of capitalization can claim. Crowdfunding is not a loan. No equity needs to be surrendered and it serves as an eminently economical means of getting your product out there. Crowdfunding also gives an early insight into how marketable your idea or product is - a way to gauge future success.

In weighing your options for financing your project it is important to consider the pros and cons. Arguably one of the drawbacks of crowdfunding is a lack of flexibility. Once you have initiated your campaign you have promised a particular product to your backers. Yet this is hardly an issue if you have a clear vision from the start. Crowdfunding is perfect if you do not mind delivering exactly what you promise.

Why not consider crowdfunding today?