Crowdfunding platforms are by no means new. However, their popularity has been somewhat limited up until recently. This is mainly a result of the fact that more and more of these websites have started to make it easier for young entrepreneurs to obtain financing for their product ideas and companies. Generally speaking, some crowdfunding platforms have terms and conditions that are so good and so easy to meet that most prefer to use them rather than get a regular loan from a bank.
This having been said, there are several crowdfunding platforms with more and more coming online every year. A large number of possible choices can make it difficult to select one that you can use to get the financing that you may need. However, before looking at what the characteristics of a good crowdfunding platform are, let us analyse how they work.
What Is a Crowdfunding Platform?
These are essentially websites that allow members of their userbase to create online presentation page through which they can explain their product or business idea. They are also required to set a financial goal for their project. Once all the details have been entered, and the page is published, other users can contribute with various amounts of money up to the point where the goal is met.
The money is sent to the user only after the goal has been met or exceeded, and the entrepreneurs are then free to spend it according to what has been stated on their presentation page. There are no restrictions on what the users can do with the money, as long as they spend it in accordance with what they initially stated. On the other hand, if the financial goal is not met, then all the money that has been raised is returned to the contributors.
What Are the Makings of a Great Crowdfunding Platform?
The main thing that you will have to look at is the community built around the platform. For example, websites such as Kickstarter are universal in terms of what kind of projects can be crowdfunded. However, some platforms only focus on specific types of products, such as computer games, books, or music.
Create accounts on several crowdfunding platforms and navigate through their pages to see what products or services other users are proposing. Ideally, you should choose a website that has strong support for your niche. In other words, the users on the platforms should be inclined to back up the type of product that you want to offer.
Once you do this, you will have to go through the terms and conditions of the website. Keep in mind that most platforms require users that have a project in mind to also offer rewards to the individuals that contribute with money towards their goal. These rewards can be anything as long as they are enticing enough to make potential backers finance your product. Some users promise prototypes of products. Others send schematics and promotional materials.
Crowdfunding platforms are easy to use, and they come with virtually no risks attached to them. Those who try to have their project kickstarted and fail do not lose anything except time. The websites have no hidden fees or charges, and all transfers are done with a high degree of transparency.
This having been said if you intend to use a crowdfunding platform to kickstart your project or company, look for one with a strong community that is geared towards your niche and avoid the websites that limit your freedom by imposing limits on contributions. Ideally, you should be able to choose how much backers can give you and what you will offer in return.