Here Is Why Startups Should Consider Crowd-funding For Raising Investments

In India, sales and revenue of business is not everything that Small and Medium Enterprise will always rely on. Raising investments for business sometimes becomes a daunting task for many Small and Medium Entrepreneurs. In order to ease the funding routes, so that they can get higher growth, more and more new-age, smart business entrepreneurs use crowd-funding platform to raise their capital. Apart from raising capital, crowd-funding is also used in validating newer products before making an investment on it.


For, Vinaya Varma, MD, mjunction, crowd-funding can be very motivating as well to a budding entrepreneur. “It provides a sense of accomplishment that so many people believe in his idea. It becomes imperative for him to transform his idea into a successful business venture as trust of so many people is at stake. Crowd-funding also hones the essential entrepreneurial skills of management, communication and marketing from an early stage as he/she has to sell his idea to a wider audience,” he emphasised.


Varun Sheth, CEO, Ketto, feels crowd-funding gives an opportunity to those who possess entrepreneur skills, along with marketing and creative knowledge. Sheth considers the social sector and creative space to be benefited most through such platform. “Crowd-funding gives them an upper edge where they can use their marketing skills as well social contacts,” he stated.


“Also when we talk about creative space in crowd-funding sector, entrepreneurs’ who have the knowledge of arts and creativity can use this sector not only to enhance their skills but also to build contacts in the industry. Creative entrepreneurs will help to build creative campaign and which in turn will help to raise funds,” maintained Sheth.


It’s Not Just Funds But Collective Wisdom


Market research has always been the vanguard of product launches and entrepreneurial ventures. But, with myriad options and big brands vying for opportunities in every possible domain, startups today are always on their toes for a flank attack to disrupt the market leader. But, market validation is something which somehow deters an entrepreneur from taking big chances as they become apprehensive about their product acceptability.


This is where crowd-funding, Nitesh Yadav, Founder, Kisan Guru and Exam Mitra, feels plays a major role. “When our project is open for crowd-funding, it’s not just about the funds but the collective wisdom of the crowd who helps in developing aspects of the product/service before it is launched. Now, since we value inputs of our crowd it engulfs the crowd in a community sentiment which itself is a great PR as the crowd now vouches for our product/service not because of any tricky advertisement but because of the quality of the experience we will be offering once the same is launched,” elaborated Yadav.


Crowdfunding also creates the hype necessary for the launch as it has already enticed a significant share of the target market who will evangelise the product/service because it’s not just their money, but their strategic advices which has been implemented.


On the other hand, as Yadav, rightly pointed out, frugality becomes a part of entrepreneurs’ identity as they are generally low on cash. “Many crowd-funding platforms don’t charge unless the targeted amount is raised. This is a win-win situation for both the entrepreneur as well as the platform as because if the fundraising campaign is successful, entrepreneurs would be happy to share a tad amount with the platform for making their dream come true,” he enthused.


Creates New & Bold Entrepreneurs


For Anshul Gupta, Founder, Razr Tech, crowd-funding is a great way to test innovation and prototypes with minimal to zero risk of failure to the company as well as the audience investing in the initial idea for it to scale. “A person with limited financial resources with a great idea can achieve and solve problems via crowd-funding thus paving way for new and bold entrepreneurs,” he emphasised.


The crowd-funding of the future


Crowd-funding has changed immensely in India. Chet Jain, founder, Crowdera, thinks that the current business ecosystem is ideal to be in this industry, since it has become more organised and technologically advanced. “People these days are keen to connect with crowd-funding platforms for both financial aid and guidance which will help them make their ideas into a tangible product/service,” confirmed Jain who reiterated the importance of improving the experience not just on the platform but also from the investor’s perspective.


“We are taking many initiatives to keep transparency between the donor and taker. Crowdera will soon change this ERA for good by empowering the ‘crowd’. Our team ensures that they are always listening to their customers and their services would always address their customer’s need,” added the Crowd-funding entrepreneur.


There is no denying that crowd-funding is next big sector in India, as we move to the age of digitization. It is hassle free and more convenient for entrepreneurs. However, Deepsikha Chabraborty, Co-founder, Wrong Route, believes, crowd-funding still has a long way to go, before it ensured better quality investments. “The platforms also need to focus on building a road-map about how they deal with the relations after investment,” she concluded.


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