Crowd Funding And Role Of Social Media Platforms
keywords – Crowd funding, Social Media, Finances, Debt, Campaign
Crowd funding is one of the effective and popular ways of fund raising method. The success of fund raising is based on the number of people the campaign reached and how the people are engaged with campaign. Social media plays a vital role in reaching target audience and to build a community among audience. The crowdfunding campaign will become successful, when the social media marketing is implemented with crowdfunding strategy.
What is Crowd Funding?
Crowd funding is also known as crowd financing or crowd sourced capital. Crowdfunding is a way of raising funds or capitals from large group of individual’s. Crowdfunding can be for an individual’s personal needs or for a start up business or for a project completion or for medical treatments. This helps one from not getting traditional loans or acquiring money from financial people.
Need for Social media in Crowdfunding
Social media increase the success rate of the crowdfunding campaign. Social media like facebook, twitter, instagram, reddit are the best platforms to run fund raising campaigns. They help to reach more people within a fraction of second. Facebook have daily active user around 1.32 billion. Instagram is best for visual content campaigns and for product based business. Essentially, Social media is needed for the following reasons,
- To reach maximum people
- To reach targeted audience who will respond
- To easily engage with potential backers or investors
- To update regularly with campaign news
- To create visual content for convincing people
Types of crowd funding
There are four types of crowdfunding campaigns.
Donation based funding:
Donation based funding campaign is used to collect funds from individuals to start a business or to complete an invention with no financial returns for contributors.
Reward based funding:
In this funding, contributors receive tokens, products or services for their donations. This is also known as seed funding, which is used by small business owners who does not require huge fund but want to provide rewards to their supporters when the product or project is launched.
Equity funding:
Equity funding gives contributors or investors a share from the business for the amount invested by them.
Debt based funding:
Debt based funding is also called as crowd lending. The person who is funding for the business receives interest for the cash he invested.
Merits of Crowd Funding
- It is the fastest way to raise funds with no advance cash.
- Presenting a project or business through social media reaches more people
- Feedback and guidance from experts help to improve your project or business.
- Investors can track the business progress and may promote the brand to their networks.
Demerits of Crowd Funding
- Fund raising through crowdfunding is not easier for all projects when compared with traditional way of raising finance.
- Before launching the project, you need to work lot for building interest among people on the chosen social media platform.
- Failure of your project reduces the reputation of your business among the investors.
- There is a chance for stealing your concept or idea, if you have not protected with patent or copyright.
- Offering rewards or returns gives more business to investors.
- One cannot be dependable on crowdfunding; alternative methods also should be tried.
How to create a crowdfunding campaign?
To create a successful crowdfunding campaign, you should understand the strength and limitations of various social media platforms. Here, some points are given to create a successful campaign.
Choose the right platform: While choosing the platform one should be very careful. First select the platform which best suits for your campaign to raise fund. He must be familiar with the platform so that he can achieve his goal.
User-friendly: Now social media accounts are accessed using smartphones. So the campaign page should be displayed in mobiles also.
Hiring influencers: Influencer can be used to speak about a word regarding the campaign.
Use a hashtag: Hashtag is a trending strategy to encourage people to join the campaign and to view all the posts regarding campaign.
Keep Tracking: Use of social media helps you to track the analytics. Always check whether the post is interested and keeps engaged with followers.
Scams in crowdfunding
Some people will try for a fraud messages to collect money. Be aware before transferring money to the receiver. On seeing the post, if you are willing to help the person then try to find the credibility of the message. If you come to know about the message through your friend’s post then you can enquire your friend for the details of the recipient. The crowd funding platform will have the details about the organizer. You can check with the websites of the platform to get details.
Images used in campaigns can be cross checked with google for its originality. Make sure that the images and name does not associate with any other campaigns. Scammers will copy photos and paste stories of some other people. In case there is no any suspicious, then you can help the needy.
Conclusion:
Crowdfunding has become one of the popular ways to raise funds for all business. If you want to use the crowdfunding campaign for your business, first research and understand about the crowdfunding. This may not work for all campaigns. Based on people’s interest the campaign gets success. Hence, while choosing crowdfunding method for fund raising, be aware of everything. In the same way, if you want to fund for any project or business, first check for the credibility of the information and then proceed.
Written By – Jaya Ambika
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