As an entrepreneur or self-employed person you may have heard about it. Krowdfunding has increased enormously in recent years. Through Krowdfunding, as an independent entrepreneur you can get starting capital funded by a multitude of people. That is what Krowdfunding is all about. You have a fantastic idea, the investors provide the financing. In most cases you go to the bank to get a starting capital or a loan.
However, it does not always mean that the bank actually gives you the green light for a loan. In that case it is good to think about this new form of financing. But how does Krowdfunding actually work? And what do you need to set up a successful campaign? In this article you can read everything you need to know about this hip way of financing that is also gaining ground in the Netherlands.
What is Krowdfunding?
As the name suggests, Krowdfunding means nothing more than an investment made possible by a multitude of people. In this case, investors. Investing remains interesting for many people. With an investment they feel involved in a project that appeals to them. With Krowdfunding, that possibility is there. A project can have an unlimited number of investors.
This allows the minimum deposit amount to be kept low. Krowdfunding is therefore an accessible form of investment for many people. Projects are often offered on the so-called Krowdfunding platforms. Here people can easily choose which project they want to support financially. A campaign always has a final amount. Only when the target amount has been reached within a set period, the financing is paid to the starter of the project.
The investors are then repaid in monthly installments. This concerns a piece of repayment of the invested amount and the interest. Krowdfunding can be quite lucrative in this way to grow savings. The percentages differ per project. This is also partly dependent on the risk group in which the project is located. Before a Krowdfunding platform accepts a project, it is thoroughly analyzed and tested by a third party. In this way an investor runs the least risk, and the entrepreneur or self-employed person or his financing application knows the chance of success.
Set up a successful Krowdfunding campaign
Just as with other forms of financing, Krowdfunding is also about money and returns. Nevertheless, this loan is mainly about goodwill and involvement. A question of awarding may go a bit too far, but emotional involvement in Krowdfunding projects still plays a major role. The decision to invest therefore in many cases depends on the feeling that the investor has with the project. Setting up a well-founded Krowdfunding campaign is therefore of great importance.
Even if you have received your financing through Krowdfunding, “customer contact” is also important. By keeping your investors informed of developments, you can easily build your own network. You can do this by writing blogs, but also by posting photos or important events around your project. With Krowdfunding you not only benefit from financing, but you also automatically engage in customer loyalty.
Average return on a Krowdfunding project
The return on a Krowdfunding investment depends on a number of factors. In most cases this is calculated on the basis of the duration of the project and the associated risks. If we assume an average risk factor, you can count on a return of between 6 and 8%. But there are also Krowdfunding projects that guarantee an average return of 20%.
In that case, the duration of the project is somewhat shorter, and the campaign is classified in a higher risk class. If you want to invest through Krowdfunding, it is advisable to read these conditions in advance. Most platforms offer a transparent representation of the risk factor and other important information about a project.
Krowdfunding can therefore be very interesting for both parties. As an entrepreneur you can have a starting capital in a fairly simple way. The investor can in turn make a financial contribution to a company or initiative that is of interest to him. The new form of financing is therefore more than just money. Krowdfunding is also about goodwill, interest and mutual trust.