I. Crowdfunding
Literally, the term crowdfunding means ‘funding by the crowd’, hence the name participatory financing. This alternative financing solution, which is completely disintermediated (without intermediaries, directly from the donor to the recipient), has become widespread thanks to the internet.
Crowdfunding kills two birds with one stone: it allows you to quickly raise funds from the general public while promoting your project. However, the project must meet several criteria :
- It must enable support for a cause or a person,
- It must be innovative or creative,
- It must be aimed at a B2C audience, and
- Grant access to counterparties (this is not mandatory but may motivate action).
Crowdfunding can take the form of donations (with or without compensation), loans, or equity investments.
As for rewards, they can take several forms depending on the nature of your project and your persona. They can be symbolic rewards, such as goodies or free samples. For example, if your project involves a product, you can provide it for free or at a reduced price, but this is more complicated when it comes to a service (one or more events related to the project, an e-book, etc.)
To run a crowdfunding campaign, it is advisable to first communicate it to a private network. Start with your friends and family, who will be most likely to support your project, then work on developing a community that is committed to and convinced by your project. These two private circles form the core group of people who support your project, the aim being to convert the members of this core group into ambassadors who will share your project.
In order to move on to the next stage and attract the general public, this core group should ideally represent 30% of the target amount raised. If someone who does not know you or your project sees that participation in your campaign is low, they will not be motivated to contribute. Conversely, if they see enthusiasm and good participation (from your core group of ambassadors), they will be more inclined to add their contribution to the cause.
It is crucial to focus your communication efforts before and throughout your campaign, and to do so consistently so as not to lose your leads along the way. Such a commitment represents a significant amount of work. This is partly why it is advisable to spread your campaign over a period of 30 days. Take advantage of this opportunity to drive traffic to your landing page (a single web page where you present your project and include a call to action to support it) by communicating on social media, through influencers, and using adverts (Facebook, LinkedIn, etc.).
In order to avoid losing your leads along the way, it is necessary to send them regular newsletters before and/or during the campaign, providing them with information about the campaign, your project and yourself so that they are ready on the big day.
In order to launch a crowdfunding campaign, you must submit a project on a dedicated platform. Many platforms have emerged, including Kickstarter, Ulule, KissKissBankBank, Anaxago, and Smart Angels.
II. Crowdlending
Crowdfunding in the form of loans
Crowdfunding in the form of a loan is called crowdlending or participatory lending. These are loans with or without compensation, or minibon loans. This loan will have a term of 7 years and may or may not be remunerated.
Often confused with crowdfunding, crowdlending is similar to borrowing from credit institutions, with the difference that the lenders are individuals or legal entities who lend a sum of money for the project funding private individual. This amount will subsequently be refunded (with or without interest).
Crowdlending is a good way for businesses to obtain a business loan without going through banks. This solution is suitable for microbusinesses, SMEs and mid-cap companies, in any sector of activity and for almost any need.
Like crowdfunding, a crowdlending application is made directly on a crowdlending platform by submitting your project and waiting for it to be approved by the platform's experts. Some examples of specialised platforms include Credit.fr, Wesharebonds, Unilend and Lendopolis.
Crowdequity, or equity crowdfunding
This involves acquiring a stake in your company's capital. The investment may be in the form of capital, bonds or royalties.
In fact, crowdequity, also known as ‘equity crowdfunding’, allows a shareholder to invest in your company in exchange for a share of your capital.
Although there are several forms of participatory financing, crowdfunding remains the most popular of all.
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