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ONLINE TALK BY PROF DR AMINUL ISLAM

Introduction to Crowdfunding
Crowdfunding is an alternate method of seeking investment for small business owners. It
functions differently from other sources of funding when you approach a single person or entity
to get the funds you need, such as a bank.
Lots of individual investors contributing small sums of money are interested in a crowdfunded
venture. They make up the necessary overall investment when all these small sums of money are
added together.

Platforms For Crowdfunding

As they provide an established user base, the easiest way to get a crowdfunded investment for
your company is to use a crowdfunding site.
Typically, it won't be enough for this user base to make your crowdfunding efforts a success, but
they're a start. They are also a source of savings that would not be open to you otherwise.
Plus, when the right investment comes along, they will be familiar with the crowdfunding
concept and will be willing to contribute money.

Crowdfunding Forms
Four major forms of crowdfunding exist:
1. Reward-based businesses that use this crowdfunding approach make a pitch to investors,
promising something for the investment in return. This could include commodities, goods,
limited editions, special access, etc.
2. Equity-this is where you sell unlisted shares of your company to investors.
3. Credit-based-it functions like a loan from a bank that you receive. However you get the
money from several smaller investors instead of one entity (the bank) giving you the loan.
4. Donation-This kind of funding often includes, but not always, incentives for committing
money. Given that people give cash for no return, the initiative or organisation they contribute to
typically has a social or charitable aspect.
How does crowdfunding function?
On the basis of a goal, most crowdfunding platforms work. In other words, before you begin
your campaign, you must identify a target sum of money. The investors pay and you get the
pledged sum of money if you get enough commitments to hit the goal (minus the fees of the
crowdfunding site, of course).
If by the deadline, the pledges you collect do not meet the goal, no one pays, and you get
nothing.
As a consequence, in addition to being a possible funding source, crowdfunding can be used as a
way to assess or determine the feasibility of your project.

Crowdfunding's Downsides
Very Public- Ideas can be stolen very openly and can place intellectual property at risk.
Considerations of reputation-there are a variety of facets of this, including firstly the presence
on the forum. Might it be regarded negatively by clients and others? If your crowdfunding
campaign is successful, there are also major expectations from investors. If it faces delays or
runs into issues, the company's image may be hurt. Finally, you are leaving your business
vulnerable to public scrutiny of your plans, product, or company by putting your idea on a
crowdfunding site before you are ready to introduce it to the general market (i.e. before it is
completely developed and tested).

Crowdfunding Benefits
1. It is a fast and simple way for your brand and for your new concept or project to get a lot of
attention.
2. You will interact directly with investors who will become your clients as well.
3. There is a slight entry barrier, sometimes much smaller than other types of investment.
4. This is a simple way to get feedback on your design.