Crowdfunding platforms have helped to raise funds for many crypto projects today. This can be seen in the number of projects being developed in the crypto space.
The internet has been used these days to raise funds, especially for entrepreneurs who have brilliant ideas to launch. Financing your products come from the crowdfunding platform (online) you choose.
The blockchain has been in use for crowdfunding as it has been useful in other areas of finance. Blockchain technology offers a clear advantage for the crowdfunding industry. It brings transparency and security to the space and protects both creators and donors in these interactions.
In this post, we’ll look at the best crowdfunding platforms for Individuals or small businesses to get early-stage support for their ideas. Before then, let’s learn more about crowdfunding and how it works.
What is Crowdfunding?
Crowdfunding is the practice of financing a business venture, project, or cause by collecting small monetary contributions from a large group of people through online platforms.
These group of contributors could be friends, family, fans of your product, etc. depending on what you’re trying to fund.
This practice is known to be of help to entrepreneurs in many ways. It gives them a chance to promote their product, service, or venture to a large pool of investors with minimal financial risk.
This can be made possible by making use of online platforms dedicated to this course. To date, people have raised more than $34 billion worldwide using these platforms.)
Some of the best crowdfunding platforms to raise funds for startups are GoFundMe, StartEngine, SeedInvest technology, etc.
How Does It Work?
Crowdfunding presents you an opportunity to raise the substantial amount you need to launch your brilliant idea. You’ll need to research your options before deciding to use a crowdfunding platform. You’ll also have it at the back of your mind that fees are required (might not in other platforms).
If you are raising funds for a crypto project, understand that cryptocurrency will be used instead of fiat currency. In crypto crowdfunding, a startup will share an idea and a date for fundraising for that idea. A whitepaper, light paper, one pager or other documents about the idea will be released.
Once the crowdfunding campaign begins, the startup accepts contributions from various crypto investors around the world.
If a particular doesn’t meet its goal, the funds are returned to the investors who have been part of its fundraising. If they got the funding above the threshold, then they can run their business with endless profits.
In some cases, a token can be created by the startups in an existing blockchain. This is to raise the funds through the crypto crowdfunding platform.
5 Crypto Crowdfunding Platforms You Need To Know In 2022
If you’ve made your research and have your brilliant ideas ready to be launched, then these crowdfunding platforms can be used. They are listed below in no particular order.
1. CoinStarter
CoinStarter is a first of its kind blockchain platform where users can launch a crowdfunding or coin-based campaign in minutes.
The blockchain platform seeks to help entrepreneurs, innovators, and creators bring their ideas to life. From the launch of your campaign to the distribution of coins, CoinStarter seeks to make every step easy and intuitive.
2. PolkaStarter
PolkaStarter is a protocol built for cross-chain token pools and auctions. It enables projects to raise capital on a decentralized, permissionless, and interoperable environment based on the Polkadot protocol.
With PolkaStarter, decentralized projects are able to raise and exchange capital cheap and fast. Users are be able to participate in a secure and compliant environment and to use assets that go way beyond the current ERC20 standard.
3. TallyCoin
TallyCoin is a crowdfunding platform built on top of the Bitcoin blockchain. The service has implemented a companion node software which allows users to receive donations directly to their private nodes.
The startup claims not to take any cut for any donations sent to anyone listing their projects on their site.
4. Tecra Space
Tecra Space is a decentralized crowdfunding platform that enables the exchange of digital assets, patents, and other intellectual property rights (IPR). It is known to also help provide opportunity for their tokenization.
The startup is involved in differentiated business and scientific activities affecting the digital development of the world. It enables the raising of funds for technological and scientific projects or startups .
5. WeFunder
WeFunder is a crowdfunding platform that bills itself as the ”kickstarter for investing.” The platform help regular people get to invest in startups which are typically at the early – stage, with projects listed on the website.
According to WeFunder, users can invest as little as $100 into startups, with the hope of earning a return on investment.
Risks Associated With Crowdfunding Platforms
Just as investment in cryptocurrencies is not without risk, so it is with crowdfunding platforms. The major risks associated with using crowdfunding platforms are listed below.
1. Intellectual Property Infrigement– This happens when a fundraiser launches a campaign to raise capital for their product while being unaware of the existence of a patent to a similar or the same product.
A company that has patented the product first might be able to sue the fundraiser.
2. Intellectual Property Theft– This occurs when a fundraise launches a campaign disclosing the idea, designs, and business plan, and it all gets stolen, usually, by a counterfeiter.
3. Fraud– The parties involved in crowdfunding can be at a risk of fraudulent practices. This may be from a fundraiser who fail to deliver the product promised.
The problem with fraud is that it puts off investors from using your crowdfunding platform as a financial tool. This leaves the platform unattractive for fundraisers.
4. Money laundering- Crowdfunding platforms can be used as tool in money laundering to push the money further in the financial chain with the intention of hiding its true nature.
One of the ways it is been done is by concealing and cleaning the illegal source of funds. This is done through wire transfers, investments on the crowdfunding and P2P lending platforms.
Fake crowdfunding campaigns can also be launched with the intention of funding terrorist activities, political groups, or other propaganda.
Conclusion
Individuals and small businesses can make use of crowdfunding platforms to raise funds for their projects. Most of the best crowdfunding platforms seek to be of help to its users. This include efficiency of the platform, no/small fee required, return on investment, etc.
Making use of crowdfunding platforms is not without risk but can be prevented by thorough check/research. You’ll need to check out investors(background, credit score, income source) and borrowers(business idea, bootstrapped funds, marketing plan, team, etc.)
Also Read– What You Need To Know About Crowdfunding Platforms
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