When a person needs or wants to raise a fixed amount of money as profits, then crowdfunding comes in handy.  It is a way of doing business. It is away in which different individuals and companies or organizations interact with each other so that they can rise up a certain amount.This money can be a loan or a donation; the money can be used for any purpose after all. Sometimes a person may have some extra salary or enough to run a family and he or she may also want to donate a certain amount every month just for charity or some, this can be the better way the best way to do that. There are or may be a few companies that are using crowdfunding as a necessary support for some projects or ideas. The crowdfunding means funding from crowd, small parts taken as investment from different people and invested in one thing and then the profits can be shared or used as loan or donation. The people who participate in crowdfunding are called participants or “backers” as they back the monetary support for the projects.They invest and give the small amount in which return they may get some profit too, might not but they will. The rewards that come or the profits that come to each individual depend on the share they contributed in the investment.

It is not like the traditional investing scheme in which the company invests itself, but instead they ask for help from the people, who are willing to participate in the new projects that the company starts and thus it is better economically too. The people may be some friends or family members or other acquaintances, or anyone. It is quite a sophisticated and a popular idea. It can be a hard task managing all the people’s investments and money and then routing it to one project etc. but it sure is the best way to deal with the new projects, or the companies these days do think like that. The companies also now try and go online, viral; people can now make an investment and be art of crowdfunding easily.

There can be a few challenges with the crowdfunding, it sure is easy but management can be a bit rough. To get the backers and attract them is the most difficult part. It is also that the success is not always guaranteed. The people may not want to invest with a company which may not have a good background. The backers are now aware of the situation and how the company is investing and what it will have impact. The thing is that these are the better ways. Even though the success is not guaranteed, the people can come up with ideas to participate with themselves and invest or start some venture for a small while to get the money. One can make effort and participate, not with the finance that you only have, but with the extra money that you may have can be invested this way.

An entrepreneur isn’t something that you can wake up and attempt to be. You are either one or you are not. It takes a rare breed to take on the challenges and fight the battles that an entrepreneur faces during their climb to the top. It takes a certain drive and determination that not everyone possesses. All of the passion in the world won’t cut it without the following three elements: solid advice, substantial capital, and a network.

Capital is always the key piece, as without it even the best idea will not take off beyond a dream or vision. You would think that it would be as easy as walking into the local bank and requesting a loan, but that is not the case at all. In fact, obtaining a loan from a small local bank is virtually impossible these days unless there is substantial collateral to back up the loan. That brings up another point, because even if a local bank decided to lend it would be a loan, as they do not invest in companies or projects. The SBA isn’t in the business of lending money, they will only back those bank loans provided there is collateral to guarantee the note. What about venture capitalists or angel investors? The media seems to love to mention these potential options, but in truth they only account for 1% of the total funding that entrepreneurs seek, and with the current lending extremely tight right now where does that leave them?

There is one funding source that they can always count on, and that is their own savings. Combine that with personal lines of credit, credit cards, and even second mortgages on their homes, and many will go this route when there are no other options present. This seems viable, especially if they have a solid idea and means to launch it, right? Well, the fact that only about 10% of entrepreneurs are able to secure all of the capital needed by doing this leaves the other 90% struggling to find other capital sources. Personal credit is very tight right now and the housing market is a disaster with few lenders even considering refinancing options, it makes the “personal capital” option very rare. This leaves many to seek additional capital from family members and friends, and although it might be easier to seek the funding from them it can lead to a very uncomfortable situation down the road in the event that the project is not a success as anticipated. Sure, everyone wants to think that their idea is pure gold, but the reality is that far more ideas and businesses fail than make it.

When the above funding methods and sources fail where does this leave an entrepreneur? Enter Crowdfunding! This exciting way to raise the funds required is fairly new and has been gaining a lot of exposure and interest over the past several months. There are a number of websites dedicated to allowing businesses to list their projects in order to attract investor interest. The simple concept has caught on heavily because of social media and the appealing process of finding a unique and interesting idea by simply looking on these sites and filtering down the options to find projects in specific industries that are of interest.

Entrepreneurs are excited about Crowdfunding because they are able to pitch their idea in one central place and allow potential investors to review their information in great detail. It all comes down to an informative and thorough pitch that not only explains the project, but also gives the potential funder some insight on the company or people behind the project. While a solid business plan is always important, investors also like to get an idea as to who the individuals are behind the project. They need to be sure their funds are going into the hands of competent entrepreneurs that have a very realistic shot at making it. Nobody wants to just throw his or her money away, so it is important to have a very strong overall pitch.

When all other funding looks slim to none, Crowdfunding gives a legitimate chance at obtaining the capital needed to get the project off the ground. With so many different Crowdfunding websites to select form it will require some research to make sure that the project is being presented on the best site based on the industry and nature of the project. There are some Crowdfunding sites that only list specific opportunities, such as vide game development, or technology products. Then, there are sites that have virtually no restrictions and they are very easy to spot as they allow any project to be listed. Sometimes these sites will drive away legitimate investors because of the quality of the opportunities. Spend time looking for the perfect website to list on, as it can mean the difference from receiving little interest and reaching the funding goal.

Deals are receiving funding on Crowdfunding websites and we encourage entrepreneurs to take a look at projects that are now closed after successful funding and see how they presented their opportunity. They obviously did something right, so make sure to look at some successfully funded projects to get some profile and pitch tips. Also, look at the projects that exceeded their goal by a large amount. In some cases there will be projects that received so much attention and interest that they raised 1,000% and more of their goal. It is a good idea to see what they did and how they presented their offer.

Although the traditional lending and capital markets are not providing the kind of funding that many companies need, Equity Crowd-funding comes to the rescue with a very attractive option for those companies that need that capital injection in order to succeed. With some research and planning it is very possible to get a pitch in front of the right individuals. For many this is the absolute last shot at obtaining the desired capital, so plan wisely and present as if there are no other options.

The overall popularity of Crowdfunding is growing at a very rapid rate, and with the increased popularity comes more projects being added to the many different Crowdfunding websites that offer a platform to promote opportunities. With new projects added daily, it really makes having a strong profile absolutely necessary in order to stand out as a project funder should look into. These websites are becoming packed full of projects across multiple categories and based on the trend this is not going to slow down. As the competition for funds increases you have to position your project in a way that it generates views and interest, and that is done with a very detailed, informative, and professional profile.

The profile you create is a direct reflection of your brand and the project you are seeking funding for. The first impression is the most important and the profile is the first interaction a potential funder has with you, so make sure to take the proper steps to do it right. Think of it as your one chance to get the funding required to get the project off the ground. Yes, Crowdfunding is extremely popular right now and people are flocking to these websites to get in on the action, but as more options become available it will mean that the money is spread thin. It is all going to come down to first impressions and presentation if you plan on landing some of that money.

Your Crowdfunding profile needs to position yourself as the expert in the industry that you are pitching in. A detailed background showcasing your experience and knowledge is essential, but you also want to show your personality as well. This is what makes Crowdfunding so special, as potential funders often decide on a project based on the connection that they feel with the project. If you come across sounding like a textbook just full of details but lack a personality it might not attract as many people. If you combine all of the details but do it in a way that shows a good personality that is also the “expert” it will attract much more interest. Many people might not fully understand the project but they will donate because they believe in you as a person. Look at some of the most successful projects that have greatly exceeded their funding goal and you will notice that they all had a very detailed, but personable pitch that showcased why the project was awesome and why the people behind it are equally as awesome.

Crowdfunding is unlike any other funding platform available, and the presentation needs to also be unlike any traditional funding pitch. The beauty of this is that you have 100% control over how you are perceived and viewed on these Crowdfunding websites. We suggest that you put just as much effort into the personality aspect of the profile and pitch as you do with the technical data and information. They are both equally important and need to work together to produce the best possible platform to showcase your opportunity to the public. Make sure to include the following pieces to create your Crowdfunding profile:

Profile Picture: Your picture is the first thing many are going to gravitate towards, so make sure you use a good one that is pleasant yet professional. The trick here is to connect to the average site visitor. You do not want to use a serious corporate headshot. That is too “stuffy” and might actually turn some prospects off. We suggest that you use a picture that displays your fun personality; select a casual picture and make sure you are smiling in it!

Display Name: There are two options here, you can use your real name, or you can use a fun name that describes the project or relates to it in some way. Now, if you have a link to a profile such as LinkedIn that visitors can view then it is ok to use a creative username to draw some additional views. Sometimes a catchy or creative user name will attract some extra interest and when it comes to Crowdfunding you want as many people to view your offer as possible as it will result in more conversations and social sharing.

Location: Make sure to use complete location details, as some people search for opportunities from their home city or home state. Make your project as easy to find as possible by the masses and casual searcher.

Social Media Profiles: This is quite possibly the most important part of your presentation. Make your project easy for people to find and also share within their social circles. Your actual Crowdfunding project will have a social share widget that will allow viewers to share, but you also want to create social media profiles for the actual project and get as many followers and likes as possible. This allows you to stay in contact with those that are truly interested. Then, get them involved by asking them to share the information with their friends, and so on. You would be surprised at how quickly word can spread based on a good idea and the power of social media.

Personal Information: A nice “About Me” section is a great way to express your personality. Do not get too technically here. You want to come across as a regular person that just happens to have an amazing deal and you need help to make it happen.

Professional Information: You also want to include your qualifications and experience so the potential funders will see you as an expert in whatever you are pitching. Do not turn this into a bragging display, but instead just make the point quickly so they can identify you as knowledgeable right away.

These simple tips can be the difference between a successful funding experience and a flop. Take the time to make sure that the Crowdfunding profile is complete, informative, and engaging. Show your personality, because it is how you are going to connect to a large number of individuals.

With so much talk of Crowdfunding lately, it’s important to fully explain what it is and how it works. There’s a lot of speculation and guessing out there, when in fact it’s a very simple and straightforward concept and process from start to finish. It involves raising money through a number of investors or donors, depending upon the type of crowdfunding. The process is completed through Crowdfunding platforms, where an individual entrepreneur can create a profile that describes the project in great detail. The best way to describe this is that it’s basically the same concept as asking your friends and family for funding, but here you’re asking the world. Through the Crowdfunding platform you are able to attract potential funding, but the power of social media is really where this will gain legs and begin to take off! It’s a way to bring awareness to the project/business while it’s in the early stages of development. There are four different models of Crowdfunding: donation, rewards, pre-purchase, and equity.

The donation model is the most common. Contributors make a donation to support the project simply because they believe in it. They do not receive anything in return other than a “thanks” but they fully understand this and just want to show that they fully support the project. There is no expectation of a return, and there is no contract.

The rewards model is one of the most attractive and popular models of Crowdfunding portals. The reward can be something intangible, such as a mention or listing as a supporter in print media, or it can be a tangible reward. For example, if the company produces custom hats, they might offer each donor a custom hat with their name on it, stating that they were a donor. Another example could be a film seeking production dollars that is offering people that donate at a certain level tickets to the premier screening, and those that contribute at a specific level may even have the opportunity to have a role in the movie. These more appealing and highly desired rewards are often limited to just one or two and they carry a premium. Just like the donation model, there is no stock in the company so there isn’t a securities issue.

Then we have the debt or lending model where the investor is essentially lending money to the company with an expectation of financial return on that investment. There is no ownership of the business given with this model and the SEC will be providing oversight of this type of crowdfunding.

Equity crowdfunding is unlike the other models as they do not give investors actual shares of the company. Both debt and equity  crowdfunding fall under SEC regulation. At the present time, the SEC has not set the rules and regulations of equity Crowdfunding, so platforms like SterlingFunder.com are waiting for clearance in order to do business with unaccredited investors.. With this type of crowdfunding, the investors get shares  of the company that they are helping to fund and also provide advice to the issuer. There is always the risk that a business will not execute its plan and leave an investor without a reward, or the satisfaction of seeing it materialize. A wise investor - even one who is donating with no expectation - will do as thorough an examination as possible.

If you are creating a project or company, you will to make your project look and appealing to engage your target audience of investors.  This applies no matter what type of crowdfunding you do. Your investors will expect to see a solid business plan, but you won’t  get that far unless you hook them right away. While someone looking for an investment is going to be more concerned with sales numbers, profit projections and their overall return on investment, someone who is donating for a reward is more inclined to judge a project on its “wow” or “cool” factor. If they like the concept, then they will probably donate. They aren’t looking for a return on their investment, they are looking for an interesting and innovative project to give their money towards.

So, why is Crowdfunding so appealing to some people? For many people, It allows them a chance to become involved in something on the ground floor. If the project becomes successful, they can say “I was part of that!” That’s a huge appeal to this style of funding. There are entrepreneurs who have a deep interest in fostering startups and nurturing a young business. That feeling of accomplishment is the goal of all who invest their money in crowdfunded projects.

This article was provided by SterlingFunder: Shifting Power from Wall St. to Main St.

When people see a “crowd” gathered around something they tend to immediately think that it is popular or something good. That is just human nature, and this same approach can be said for Crowdfunding, because the more that support the idea and donate as well as share through social media, the more “credible” it becomes and in turn it leads more people to donate to the cause as well! The general population is well aware of Crowdfunding and even if they are not 100% sure what it is, the fact that it is being mentioned on every major media network and through out social media they know they want to be a part of it. That is how our generation reacts; when they sense something is popular then they want a piece of the action, often before they even know what it is.

The majority of Crowdfunding projects are related to entertainment in some capacity. Whether it is a new video game in development, an album getting recorded, or a film production seeking capital in order to film and distribute the picture. These types of “finished products” are also ones that can clearly be identified as good or bad once finished. The people seeking the funding enjoy this approach more because they are interacting with the people that will be using their finished product. Think about this for a moment: if a video game developer walks into a bank and sits down to explain his or her project do you think they are going to stand a chance? The odds of the banker being able to comprehend or even understand what they are trying to accomplish is slim to none. Now, take the Crowdfunding audience, which is well aware of video games and will be able to comprehend the goals and visions of the project and then make an informed decision on whether to help fund the goal or not based on what they see and hear.

There are large general Crowdfunding websites that accept a large variety of projects and then there are very niche specific Crowdfunding sites that cater to a very specific type of project. Each platform will have their own rules and guidelines when it comes to what types of projects that they will accept and what restrictions are applicable as far as meeting funding goals and what can be offered to potential donors. For example, the larger and more mainstream Crowdfunding websites will make it an “all or nothing” situation, where the project must reach their goal in order to collect the funds, as this helps them set a realistic goal and not just set a high goal knowing that they will get whatever is pledged regardless. Also, many Crowdfunding sites will not allow equity stakes in the company to be given. Instead, they allow rewards for donating at certain levels.

These rewards are set by the project and can include pre-launch discounts, actual merchandise or just a virtual “thanks” for the contribution. Many of the Crowdfunding websites do not want to tread in the gray area of offering a percentage of ownership, as that constitutes an investment and could be subject to SEC regulation. When someone makes a pledge of money in exchange for a return they are expecting to make money. This would also require investment contracts and when contracts are involved it can get messy. That is why the top sites stand firm on their “no equity” clauses. This way there is no confusion in the future. The donors know ahead of time that they get their reward only if the project is a success, and they are made aware that there is a chance the project could fail. So, they need to treat their pledge as a risk they don’t mind taking, and many of the people that participate in Crowdfunding projects are doing so because they genuinely believe in the project that they have pledged funding for. They want to be part of it, and knowing that it has the chance to become popular in our culture is satisfying and part of the chase.

There is where the social aspect of Crowdfunding comes into play. Most projects start with friends and family members sharing the details via popular social sites and then it starting to spread through those networks, attracting visitors to the Crowdfunding site to see what all the buzz is about. All of the funding sites allow the details of the project to be shared very easily, and the project should really encourage those why donate and pledge to share with their friends as well. Once there is a little buzz about an idea it will spread naturally if it is unique and interesting.

That is why this option of funding is so popular right now. There are plenty of ideas that make sense to the general population, but it might not make sense to a financial institutions underwriters or decision makers. There isn’t a better way to see if there is a real interest in your idea than presenting it to the public before all of the hard work and money is spent. If there is a warm welcome and the pledges come in and meet the goal then obviously there is a need and want for the product. There isn’t a better way to test the waters!

Another reason Crowdfunding is so appealing is that the money doesn’t have to be repaid like a traditional loan. Yes, there are rewards and gifts for donating at certain levels, but that is a much more appealing offer to a start-up rather than having to stress about repayment or having to give up majority ownership to a venture capital company. When you take all of that into consideration it makes Crowdfunding look like the best option! While many used to turn to Crowdfunding as a last resort option that may soon change and it may be the first choice of many. The benefits are abundant and the company can come out ahead by raising the funding this way.