Crowd-Based Financing Tools for Entrepreneurs: A Guide for Effective Crowdfunding

Abstract

Crowdfunding has changed in recent years. It now offers more opportunities to entrepreneurs through more channels. But what factors are critical for success? This chapter begins with a discussion of crowdfunding as a viable source of funding and markets for a business idea. The different crowdfunding options available to fundseekers are described. A proposal of how to achieve a successful project is then presented. The proposal explains how to prepare a project, create a campaign on a platform, promote the project within networks, and close the circle. The community is a fundamental element from the very first stage of idea development. The community must be nurtured throughout the entire process, even when closing the circle after receiving funding. Because crowdfunding predominantly involves peer-to-peer transactions, appreciation is a key aspect. Success stories of projects funded through crowdfunding (reward-based, donation-based, and equity-based crowdfunding, as well as crowdlending) and platforms for different types of crowdfunding are also analyzed. The key aspects for entrepreneurs to run a successful campaign within the crowdfunding system include diversity, creativity, innovation, and transparency.