If you are thinking of launching a project of Kickstarter or Indiegogo; want to invest on a project on those sites, you should be aware of the pros and cons of crowdfunding –
– PROS of Crowdfunding:
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LOW RISK
Crowdfunding requires very little investment before starting the campaign. With platforms like Kickstarter and Indiegogo, you do not have to fulfil the rewards unless you reach the funding goal. Thus, there is no obligation to do anything if you do not reach the funding-goal.
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EXTRA EXPOSURE
With crowdfunding, you can tap into a wider audience in more than one ways. You connect with a robust community that is a large network of potential supporters. Plus, with social media your project gets the leverage it needs- i.e. it creates a news event which people can get excited about.
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TECHNOLOGY
Crowdfunding platforms are created on requested technology solutions whose quality makes it easy for you to set-up and launch a campaign even if you are not a technology expert.
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NO EQUITY
Equity crowdfunding is certainly an option if you want, but most crowdfunding campaigns do give equity in the project. It gives you more control over your company or project and enables you to raise funds without losing on ownership.
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IDEA VALIDATION
Entrepreneurs spent a great time of money and time on an idea before sending it out to the world. Typically, though, they don’t know if people are interested until after the launch. Crowdfunding validates your idea before you spend more time and money on it to determine if it’s worth it.
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TRANSPARENT
It’s easy to communicate with your stakeholders via a crowdfunding platform.
– CONS of Crowdfunding:
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RISK OF FAILURE
Any investment is not without the risk of failure, and it should not be the reason not to invest or put your project on the platform
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LESS FLEXIBILTY
Once you have put your project out for crowdfunding, you are promising something very specific for the backers. Therefore, it is necessary that you think-through and not deviate or change major features mid-production.
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TIME/MONEY INVESTMENT
You will still have to invest in a little bit of money and time launching your campaign. Like making an MVP (minimum viable product) or investment in promotional materials such as photography or videography.