Friday, January 27, 2012

What is Crowd Funding and Does It Really Work?

One of the major challenges of starting a small business is finding financing. Banks are giving out fewer and fewer loans in this economy, so where is an entrepreneur supposed to get startup money? You may need to get creative and try alternative financing options like crowd funding.

According to Wikipedia, crowd funding is "the collective cooperation, attention and trust by people who network and pool their money and other resources together, usually via the Internet, to support efforts initiated by other people or organizations. Crowd funding occurs for any variety of purposes,from disaster relief to citizen journalism to artists seeking support from fans, to political campaigns, to funding a startup company or small business or creating free software."

In a July 2011 post, I described a Pittsburgh brewery that was using crowd funding to fund their expansion into a larger facility. Below is a video of a New Jersey woman who recently used crowd funding to open a storefront for her baking business.

Is this type of funding right for you? As I've said many times before about trying a new idea, DO YOUR RESEARCH! Every business is different and you must weigh the pros and cons to tell if this is right for you. In the near future, I'll write a post about different kinds of crowd funding websites.

If you are an ag entrepreneur and have tried crowd funding, how was your experience? What kind of promotion did you do? What kind of advice would you give others thinking about trying crowd funding?

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