Crowdfunding is growing in popularity as an option for business funding. It involves reaching out to many investors, each to fund only a very small part. This is useful for many businesses, but it isn’t for everyone.
How do you know if it is right for your business? The following are situations that make crowdfunding probably not the best small business funding option for your company.
Your business is Difficult to Describe Online
By nature, crowdfunding works almost completely online. Business owners submit proposals to potential investors through a web portal, and those that are interested sign up to support it. If your business is difficult to describe online, it is going to be hard to convince investors to give it a shot.
You Need a Lot of Funding
The average amount gained through crowdfunding is $1,000. If more than this is needed, it could result in a situation where you have too many shareholders. Not only is this difficult to manage, but if you need to ask for more you could dilute the shares significantly.
It is Too Early in the Life of the Business
If it is too early on, it is going to be difficult to convince multiple investors to take a chance on you. Crowdfunding works best in the later phases of startup or with established businesses.
Whether you are able to obtain small business funding from crowdfunding or not, business financing is one of the most common small business funding options. Biz2Credit can help with that. Our network of lenders is extensive and offers many options at attractive rates. Visit Biz2Credit.com today to get started or find out more.