What You Should Consider Before Participating In Crowdfunding

Crowdfunding is a way for artists, entrepreneurs, individuals, or companies, to raise money, so it is used in completing a project, disaster recovery, or paying for serious medical requirement.

An individual or group of people initiates the crowdfunding program, comes up with a goal and a deadline, and then markets the campaign to investors or potential backers. It is good that most fundraising websites give full information about their company, their purpose, objectives, and goals, but it is still necessary that you do additional research before contributing. Research the reasons why the company demands support. The reasons have to be substantial. Otherwise, you shouldn’t participate. Always ensure that the situation stated is related to the company, or the online creator, and that it’s worth contributing.

Besides, look at the type of the campaign. We have two major types of campaign- “all or nothing,” and “flexible funding.” While “all or nothing” only gives the contribution requested, “Flexible funding” goes beyond what is stated, and allows the creator to get all of the donations, regardless of whether or not the fundraising goal is attained. You should therefore scrutinize these two options, and perhaps choose to participate in the most suitable – the one you feel contented with.

Check the Time of Payment Before You Participate In Crowdfunding

Does the fundraising site charge your credit card immediately after putting a pledge? Are they quick into taking your money? In case you have some other tasks to accomplish with the money, don’t go to companies that will immediately make a deduction. Instead, consider investing in companies that will give some allowance, so you make prior preparation, and of course, get ready for a deduction.

Apart from that, you should also consider the additional fees. Some websites impose additional fees to their backers. In one way or another, they creatively deduct extra amounts, and subsequently give excuses to make them understand it was relevant.

Don’t pay the money blindly. It is your right to receive a substantial explanation on the same before you pay. Most fundraising sites charge their backers extra credit card processing fee.

Crowdfunding Rewards

Of course, it is human nature to give and take. No one wants to associate with non-profitable activities. Before you invest in any crowdfunding, inquire if you’re entitled to any rewards. And if any, get a clear clarification of the total amounts. Most companies will let you order some of the products the company produces, in return, while others will give different rewards, depending on the amount you invested.

Moreover, ask for ownership control. After you’ve invested, do you have some control, or ownership stake in the project? And most essentially, are they able to refund the amount contributed. In case, the project is halted prematurely, or it fails to attain the intended goal?

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This article mention all pros and cons of Crowdfunding.
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