A luxury beauty shop, a handy app for parents or a cozy catering business. You have your business idea and you know what to look for as a starter, but you lack the financing to launch the product, open your own business or continue to grow. People often think of tapping into savings or a bank loan. You can also finance your business through crowdfunding.
Crowdfunding for businesses growing
Via a crowdfunding platform you ask potential investors to finance your idea through donations or a loan. The consideration consists of interest, a product or service, or shares for the investor.
Research by crowdfundingwaarden.nl shows that since 2011, 1.165 billion euros have been raised through crowdfunding in the Netherlands. An increasing proportion concerns financial support to companies. In the first half of 2019, 1,496 companies raised 186 million euros. That is no less than 92 percent of the total crowdfunding amount in that period.
Loans are the most popular form. In the first half of 2019, 92 percent of the crowdfunding amount was a loan. In 2018 that was still 86 percent.
Financing method for women
Crowdfunding is an interesting financing method, especially for female entrepreneurs.
According to TechLeap.nl of all investments in Dutch startups between 2008 and 2019, only 5.7 percent went to companies with at least one female founder. While 17 percent of all Dutch startups have a female co-founder.
Startups with female founders received an average of 1 million euros in investments from venture capitalists in 2018, compared to 5.6 million euros for startups founded by men. In contrast, women “more often receive money through crowdfunding, angels and corporates”.
The market is responding to this. This is how 'The Next Women Crowd Fund' was set up. A crowdfunding platform for entrepreneurs where the 'crowd' mainly consists of female investors.
Successful crowdfunding
That crowdfunding can be successful has been proven several times. More than $4.2 billion has been invested on Kickstarter in 10 years, resulting in success stories. Betway examined the most successful Kickstarter campaigns ever and named Oculus Rift the biggest success story. The campaign for virtual reality technology smashed the target of $250,000 in 2012 with $2.4 million.
Compared to campaigns from smartwatch company Pebble (record $20,338,986) and card game Exploding Kittens ($8,782,571 with record 219,382 supporters), this seems little, but the real success came two years later with a $2 billion investment by Facebook. .
Crowdfunding as a means of financing is therefore an interesting alternative. Getting financing alone is not enough to make your business a success. You have to have a good idea, know how to stand out with your company, acquire customers and keep developing.
