Being the youngest startup nation, India has developed a startup ecosystem driven by technology, domestic market, and massive funding. Setting up a business in India has become the hottest trend. Once you have that flawless idea, the next step will involve sourcing that idea. Usually when we think of a startup, what is our biggest concerns is the investment we will need to put in it.
Crowdfunding is the solution for all your investment needs when it comes to implementing a successful business plan as it will help you raise funds through various platforms. Further details for crowdfunding for startups have been discussed below. Literally, it implies raising money from a large number of people who are willing to invest in your business idea. Nowadays, a number of platforms have come up where the backers provide the funds for startups.
The process of crowdfunding has given opportunities for the budding entrepreneurs to raise hundreds and thousands of dollars, with the backers hoping to invest in probably the next big thing. It is not only time saving but also gives the company control over how to reward its shareholders, establish a wide customer base and organise multiple marketing campaigns. Crowdfunding gained grounds when one of the platforms, Kickstarter came into the market. As this site began gaining attraction, a lot of people had the choice to put up their creative startup ideas on the site and raise funds for the same.
Although the concept of crowdfunding became popular recently, its origin can be traced back to 1700s when Alexander Pope, an English poet, raised funds from people for his work of translation of Greek poetry into English in return of being acknowledged in his final book. One of earliest incidences of crowdfunding also includes world’s famous landmark, Statue of Liberty which was partially funded by the American crowd when the American Committee of the Statue of Liberty fell short of funds. It had then started as a fundraising campaign which was launched by Joseph Pulitzer in his newspaper The New York World. In just five months, the campaign had raised $101,091 from over 160,000 donors.
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Modern-day crowdfunding for startups emerged in 1997 when British rock band funded their reunion tour through online donations from fans. Inspired by the campaign, the first ever crowdfunding platform, ArtistShare was launched in 2000. The term “CROWDFUNDING” was first used in August 2006 by an entrepreneur Michael Sullivan. He tried using crowdfunding for his company, Fundavlog, which attempted to create an incubator for video blog projects. But the campaign failed as it could not collect even a third of the funds required to be raised. Later due to the collapse of housing market and financial sources in 2008 owing to the Great Depression, people began to switch to alternative means of fundraising, thus leading to the growing popularity of crowdfunding.
Soon the crowdfunding revenue tripled from $530 million in 2009 to $1.5 billion in 2011 in the US. Witnessing the growth in crowdfunding, in 2012, the first business dedicated crowdfunding platform, Fundable was launched. One of the biggest success stories of modern day crowdfunding has been that of Pebble Technology, which raised over $30 million from two campaigns combines. This company even broke the record of the fastest campaign to be funded as the campaign for Pebble Time in February 2015 has achieved its fundraising goal of $500,000 in only 17 minutes.
Crowdfunding has not been a new concept in India. It has been followed since times immemorial. We usually come across those donation boxes, that is what forms the basics of crowdfunding. In India, one of the first and most successful examples of crowdfunding has been that of the textile company by the founder of Reliance Industries, Dhirubhai Ambani. His small yet expanding textile business was crowdfunded by various communities of Gujarat.
But crowdfunding is not a popular concept in India when it comes to startups. The industry is not investor friendly as people still have lower trust levels when it comes to funding online. It could be easily seen in the context of e-commerce industry which gained grounds in India only when they initiated the concept of cash on delivery. Many other Indian entrepreneurs have had a huge success when it comes to raising funds from various crowdfunding platforms.
Here are some of India’s top business crowdfunding campaigns of all time:
Exploride, a Kerela based startup in 2015 pulled off Asia’s largest crowdfunding campaign. The company crossed its initial target of $100k in only five days and reached $500k mark within 40 days of its launch. Exploride thus had set up a record in crowdfunding history of Asian startups. The campaign was launched on the platform of Indiegogo. The company was started by Sunil Vallath in June 2015 to meet the urgent need of display alarm and safety devices for cars. Not only Exploride is the sole player in the Indian market but also one of the most successful crowdfunding campaigns from India.
Rachana Mudraboyina, is a transgender activist from Hyderabad. She along with a filmmaker Moses Tulasi, had the vision to create YouTube channel to create a vision about the Hijra community considering the way they were treated by the local people. She then raised five and a half lakhs from crowdfunding which she ultimately used to create a twenty five-part YouTube web series, TransVision along with three other co-stars.
The Great Indian Obsession
A startup by Adhitya Iyer, an engineer by profession was aimed to create an independent T-Shirt brand selling engineering themed clothing. He soon realised that there were many like him for whom working as an engineer wasn’t their true calling. He had quit his job, borrowed funds from a friend and went on to observe people around the country. He then started a crowdfunding campaign on Kickstarter and managed to get $14,000 funding for The Great Indian Obsession.
Crowdfunding your startups will help you generate traction for your business. To demonstrate this, use your large base of backers, to gain pre-orders of the products and let people know about the service your startup offers. Gaining the interest of potential clients in your products and services is another way to generate social proof. It will let the audience know that people trust the business and thus investing in it. Also, throughout your crowdfunding campaign, you will get several opportunities to engage your supporters and grow the audience. This will help you begin your startups marketing even before you start your business.
But crowdfunding campaigns have not always been successful. There have been instances where the company had raised the required funds but failed to bring its products or services within the market. One of such examples has been that of Central Standard Timing which raised over $1 million from 7658 backers on Kickstarter for its product which was deemed to be “world’s thinnest watch.” The company was funded in 2013 but even by 2015, it struggled to find the technology which was needed to create the watch. Finally, in 2015, it posted an apology update for the same.
To start your crowdfunding campaign, you must be clear with your project idea. Decide a budget and set the time limitations within which you can raise the funds. For registering for the campaign, you will need to pay the crowdfunding platform but before that, you must research well about the platforms available. You will need to explain your backers about your project in a precise yet clear manner to grab their attention. Let your supporters know about your campaign before you launch it and encourage them to share and donate. Keep your crowdfunding backers updated about the progress of your campaign and how close you are to your target. Some of the Indian crowdfunding platforms include, WishBerry, FuelADream, FairCent, Milaap, Ketto and many more.
There are many commercial real estate organisations in India which provide startup desk funding. Also, under their skilled mentors, startups can get ancillary support to meet their workspace requirements, influential network to get in touch of people who matter and well-designed office spaces designed for highest productivity.
Though there has been a massive change in modern-day crowdfunding from its origin, it is still based on same principle of raising funds from a single platform where each donor pledges as much or as little as he wishes. Many critics complain that crowdfunding has become more of a marketing tool to boost the customer base of new products rather than innovative way to fund the project.
It is not only the above-mentioned startups, but also hundreds more which have attained success through crowdfunding. It is necessary to have a full proof plan to use the resources wisely. If these funds are invested carefully, they will surely be a source of high returns in near future. Weigh the pros and cons of your choice and then commit towards hard work and smart planning for the best results.