Apr 28, 2016

Crowd:The New Incubator for Startups

Crowdfunding has become a serious source of capital to kick-start new ventures and is by far the most disruptive innovation of the 21st century. As an industry, crowdfunding has developed steadily into a primary tool for entrepreneurs and creative people to assess the potential for their ideas, engage with specific people who would be interested in these ideas, and also attract the funding which is pivotal to the success of any project.

One of the great advantage of crowdfunding is that it makes a startup raise its game. When business goes through the crowdfunding process, they come out stronger because of the question asked of it and the scrutiny it is put under. As opposed to one solitary angel investor, a business seeking crowdfunding will likely be put under the spotlight by finance, technology and marketing experts in the course of their raise. Also by taking investment into the public realm, I feel the examination is more diverse and more probing.

Crowdfunding also has empowered Entrepreneurs. Crowdfunding in my view is a transition from a top down model where angel investor would tell entrepreneur what they need to do, to bottom up model, where Entrepreneurs are in command and define what they  want.

Another benefit of Crowdfunding is that it allow equal access to financing and thus opportunities, Traditionally Entrepreneur were expected to fund initial growth from their own saving, Crowdfunding has allowed Innovator from humble background to participate in the new economy. Moreover Crowdfunding has enabled businesses which do not fall into the Category of "Fundable Business". Artist, Designer, Creators have never participated in the  VC Funding Games and Crowd today is supporting these people to fulfil their dreams.

Another benefit of Crowdfunding is that it allows you to fail early, and thus help you validate your assumption.  Traditionally Entrepreneur use to spend huge chunk of money to validate their product-market fit. Consumer brands have always struggled with decision relatee to pricing and revenue forecast, whenever they have pitched to investor. Crowdfunding projects help you make an educated guess when you define milestone to your team.

For startups one of the biggest problems has been communicating and engaging with investors after successful funding. It may be the case the profession investor are interested in the big updates, but less bothered by the smaller, day to day running. Crowdfunding helps founder decide what, how and when they would like to send updates to their project backers.

Finally a successful crowdfunding other than money and market validation, helps your business valuation. I feel business valuation is the function of Product, Market Size and Expected Risk. A crowdfunded projects help you score more on account of risk that investor would have projected.

Please Feel free to connect with Varun at vc@fromvc.com or call him on 9873274783, if you are looking to crowd fund your next killer idea.

About the AuthorVarun Chandra@VChandra
Varun Chandra is a Guest writer for Startuptimes.in . Varun is currently working with Desiredwings & helps entrepreneurs find micro investments. 

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