Every successful business starts with a great idea… and a full business plan, production resources, a marketing campaign and, of course, the means to bring it all to life. Traditionally, entrepreneurs would have to reach out to investors for funds in exchange for shares of the business or profits. But thanks to sites like Kickstarter and Indiegogo, Inc., creators are able to fund their projects with donations from online backers, raising money without sacrificing ownership or equity of their brands. And it’s becoming increasingly popular.
Well-known crowdsourcing site, Kickstarter.com has raised over $2 billion dollars from over nine million people to fund 90,000+ projects since its launch in 2009.
It’s the perfect business model when you think about it—supply and demand at its most basic level. People want a product, so they contribute toward its development. A creator develops a business plan and backers pledge toward a goal. If the goal isn’t met, the backers have no loss. If it is met, they get to watch their investment come to life. But why is this modern-day panhandling becoming so widely accepted?
Many millennials desire authenticity, so it’s no surprise contributors want small business and creativity to succeed amidst a sea of Walmarts and McDonald’s—and they want to be along for the ride. Crowdsourcing makes investing in small business ventures personal and impactful. Contributors get in on the ground floor while the creators get their funding (aside from Kickstarter’s 5-percent cut), creative freedom and control of their project. It’s a win-win-win.
But what happens when it doesn’t go according to plan? Some fundraisers aren’t prepared to fulfill the demand that comes with a successful project. What happens when the realities of new business come to life? Production gets delayed. A material source falls through. Timelines go to the wayside and money runs dry. Or, even in the best-case scenarios, what if you develop a product, but no one is buying it?
Of course these things can happen to the most successful traditionally funded business owners as well. But they usually have one thing many of the crowd-sourced entrepreneurs don’t: experienced partners. These are seasoned professionals that have learned from trial and error and have set themselves up with a network to rely upon.
With traditionally funded investors in your corner, you’re opening yourself up to valuable personal connections and expert opinions that you wouldn’t have with thousands of online backers. Simply put, they’re there to support a return on an investment whereas crowdfunders are just along for the ride.
While online backers can come together and crowdfund a project, there’s no replacement for someone willing to partner with you in your business venture. A partner provides something worth more than money; they believe in your idea and know how to take it all the way.
Likewise, marketing agencies have a vested interest in your success. They can also bring an outside perspective and the lessons learned from other clients to your new business. Furthermore, they can focus on your goals and connect you with consumers to get your name and product out there.
It all starts with your great idea, but success can be found more easily when you have a partner by your side.