What is Crowdfunding, and How to get Funding?

What is crowdfunding? (Crowdfunding in Hindi), what type of funding is this, if you are using social media, then you have mentioned it, then you must have heard about what is crowdfunding at some point.

This is a very innovative idea, to start any startup, company, or business, or for any such work which requires funding, and with the help of the internet, this innovative idea is more and more people with the help of the internet. Is being able to reach, due to which more people are now joining it.

Crowdfunding is a very familiar name in the world of funding. No need to ask about the subject.

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Then let’s know what is this crowdfunding.

What is Crowdfunding?

Table of Contents

Crowdfunding As the name suggests, taking money in a bunch, yes Crowd is an English word that in Hindi means flock and Funding means collecting money. Whoever invests their money here, knows very well where and why they invest their money. Often this happens only for a particular cause.

In simple words, crowdfunding is not a new concept as it was already prevalent in our country in another form. For example, donations, which we collect from the people around us on the occasion of any festival. Due to this, it becomes easy for people to do any social work. Hopefully, there will be crowdfunding in your life too.

This is a way to raise money where the internet and social networking such as Facebook, Twitter, or any other crowdfunding-dedicated websites are fully used.

It helps small businesses and startups to improve, with this, more and more people will know about them through social media, which will increase their investment base and funding prospects. Along with this, it is also used in films, social causes, and music festivals. It is dedicated to many models such as peer-to-peer lending.

Also read: How To Open Online Account In ICICI Bank?

What are the main components of crowdfunding?

If I talk about the modern crowdfunding model, then there are mainly three important parts to it. Which are Project Initiator, Supporters, Platform. Where the job of the Project Initiator is to propose, that is, to tell people about their project. On the other hand, there is other Supporters which can be either individuals or groups whose main job is to understand and support the given idea correctly, and the third and last part is the right Platform which is to launch that idea in front of the right people. Gives an opportunity to do so that these three parts together can fulfill that idea.

Types of Crowdfunding?

If we talk about different crowdfunding then there are many types of crowdfunding in India like debt-based, equity-based, cause-based, rewards-based, software value token, donation-based, litigation, etc.

1. Equity-based crowdfunding

In this type of crowdfunding, investors invest large amounts of money most of the time so that they can get a large piece of equity in the startup. Most of the time equity-based crowdfunding is done for the growth of the company.

This type of crowdfunding is considered illegal in India. SEBI (Securities and Exchange Board of India) is the only stakeholder who can frame guidelines to make it legal.

2. Reward-based crowdfunding

This type of crowdfunding is very much found you. As you can understand from the name, in this the investor gets a tangible product in return for his investment. For example, if you are a startup of digital watches, then you have to reward your investors in the form of digital watches in the end. It is completely legal in India.

3. Donation-based crowdfunding

In this type of crowdfunding, donors can donate to any noble cause according to their own. This donation can be of any amount. Here in the end the donors do not get any reward as it happened in reward-based.

It is completely legal in India. Here the donors donate wholeheartedly for the betterment of our society. For example, Ratan tata who do a lot of donations from time to time.

4. Debt-based crowdfunding

In this type of crowdfunding, you invest in the security of the company (also called debt instrument) where your objective is to give your money to the company as a loan, and in return, the company will return the money to you at a specified interest rate.

Along with this, there are two types of debt instruments secured and unsecured debt instruments. Interest rates are also typically based on the level of risk associated with any particular startup or entity. This is legal in India.

5. Public-Private Partnership

(PPP) which is based on an equity-based model, it is mainly practiced in crowdfunding in India.

Examples of Crowdfunding in India

Although you will get to see many examples in India regarding crowdfunding, here I am going to tell you about some examples.

1. A crowdfunding campaign was started to train the new generation of artists in the right way, whose basic objective was to preserve the theater art form of Koodiyattam.

2. There is a Paralympic badminton star Mark Dharma who did not have money to participate in para-badminton, so a crowdfund was started, which covered his entire journey and he set big records in Parabadminton International 2017 being held in Thailand. Did.

Also read: How to get a short-term loan?

What are the Famous Crowdfunding Platforms of India?

By the way, there are many crowdfunding platforms in India, but only a few of them have been able to make their independent place. Here I am going to tell you about the famous crowdfunding platform.

Famous Crowdfunding platforms :

Wishberry, Milaap, Miracle Foundation, RangDe CrowdCube, and Seedrs are performing very well in India.

The main work of Wishberry funds is to work for creative artists.
Whereas Milaap and Ketto mainly work for Charities.
Miracle Foundation mainly works for orphans or orphans.
the range is an internet-based peer-to-peer micro-lending platform that provides low-cost loans to rural entrepreneurs located across India so that they can do their jobs efficiently and smoothly.
After all, CrowdCube and Seedrs are Internet platforms that help small companies to issue shares. They provide these shares to those registered users who have made some investment in that companies for good returns.

Along with this, many such platforms have also arisen which have been created to give more funding to scientific projects, one such crowdfund is experiment.com and the other is The Open Source Science Project.

What are the Benefits of Crowdfunding?

By the way, there are many benefits of crowdfunding, but I have tried to bring some important ones in front of you here.

Crowdfunding, due to no formal banking system, this process is not very dangerous.
This is a very efficient system and it takes very little time.
It increases the productivity of innovation and entrepreneurship to a great extent.
With the help of this, small industries can make good progress if they get the right guidance.
This makes the way of doing business policy very easy.
It has many applications as it provides funding for very creative work such as blogging, journalism, music, independent film, and startup companies to work further.
This is a very good way to return something to society.
It allows creators to attain low-cost capital.
Crowdfunding makes it very easy to get more publicity, a better customer base, and good employees soon.
It provides a good platform for people to donate and invest so that the right thing can reach the right people.
It does not believe in caste and gender discrimination and looks at all people with equal eyes so that equality can be brought into society.
It earns mehndi. These platforms earn search and transaction costs so that they can participate in the market better.
It opens doors to good and neglected markets for individual investors.
Having investors here increases the value of the companies and with this, they also add value to the companies.

What are the Demerits of Crowdfunding?

As we all know that everything has two aspects, in the same way, crowdfunding also has two aspects, one is its benefits, about which we already know, now let us understand what are its main demerits:-

It is a bit risky for new small-scale investors and entrepreneurs and due to this, they fail most of the time in this new venture.
Here there is also a danger of fire in Reputation, if the goals and targets are not reached at the right time, then it is not successful in generating interest, due to which it can also be a public failure.
Intellectual Property (IP) protection can also be issued according to creators who engage in crowdfunding because they have to show their final product in front of the entire public beforehand, which greatly increases the risk of being copied. gives.
There is also a risk in this that if the same network of supporters is repeatedly visited, then the campaign may not get the right kind of support, which can also become a big failure later.
Since it does not come under any regulatory framework, there is always a fear of its public misuse.
Since there is no formal banking system in this, the chances are high that there is more fraud and money laundering here.
There is also the risk of creditworthiness and enforceability.
Along with this, there is always a lack of expertise here because the ratio of novices is less here.
As we know that the startup sector in India is still immature, so the chances of failure are very high here.

How can crowdfunding be made a success?

If crowdfunding is to be a complete success, then some things have to be looked at with special attention.

Such as complete transparency and accountability to reduce fraud and illegal activities.
is mandatory to have.
Social media should be used to spread awareness.
It should always be noted that the money reaches only the right people and comes in contact with the least number of people.
All the details should be properly documented so that the accumulated funds are not misused.
There should be laws in India to support crowdfunding and entrepreneurship.
The attitude of the people regarding crowdfunding should be changed.
The belief about private entities should be changed that they are not fully profit-oriented.

With this, if crowdfunding is to be made successful in India, then a pro-business environment must be established.

WHAT DID YOU LEARN TODAY

I have full hope that I have told you guys what is crowdfunding? Gave complete information about and I hope you people have understood about Crowdfunding in Hindi.

I request all of you readers that you also share this information with your neighbors, relatives, your friends so that there will be awareness among us and everyone will benefit a lot from it. I need your cooperation so that I can pass on more new information to you guys.

It has always been my endeavor that I should always help my readers or readers from all sides, if you people have any doubt of any kind, then you can ask me without any hesitation. I will try to solve those doubts. You will find this article What is Crowdfunding in Hindi? How did you feel, do tell us by writing a comment so that we too get a chance to learn something from your thoughts and improve something?

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