As many of you probably know, crowdfunding is a relatively young industry. (Fun Fact: Kapipal was one of the first crowdfunding platforms starting way back in 2009!) But what it lacks in years, it makes up for in funding. Studies estimate that in 2015 the crowdfunding industry surpassed over $35 billion in funds generated. These numbers are expected to increase with each year, so it is no wonder why innovative start-up companies are now incorporating crowdfunding within their investment strategy.
Yet after interviewing a wide variety of start-ups, we discovered that the attractiveness of crowdfunding isn’t entirely related to money. Below, we list some of the less obvious reasons why many start-up companies are utilizing crowdfunding.
Personal Connections with Their Consumer Base
After our interviews were complete, the Kapipal team was stunned (well, sort of J) by the fact that every single start-up company loved how crowdfunding provided an intimate connection with their consumer base. While the details of these connections different for each start-up, the general consensus was that crowdfunding with Kapipal provided the unique opportunity to get direct, immediate feedback from their audience.
One example of this was that through a crowdfunding campaign, a start-up company literally made slight alterations to their product based on direct suggestions from campaign supporters. So not only did the company release a better product, but the consumer received the exact product that they would be interested in. Talk about personalization!
More Creative Freedom
In the traditional funding format, start-ups seek out investors who will provide them with large amounts of money. The investor does this with the assumption that in the long run, they will earn more money than they initially invested.
As you can imagine, this process places quite a heavy burden on the start-up company to make money. Obviously there is nothing wrong with making money, but when that is the absolute goal, then both the product and creativity must be mere secondary concerns.
Crowdfunding completely erases this burden, as start-ups no longer need to rely on the traditional investing structure. By generating funds via online crowdfunding platforms, companies now have the opportunities to be creative by testing a wide variety of products without having to worry about owing any huge investment firm money.
A phrase that we kept hearing over and over from start-ups was, “Kapipal provides us the opportunity to test, and then test again.” One marketing manager even noted that Kapipal “provides the opportunity for us to test and see not only what our audience would want to buy, but what they are passionate about, which are entirely two different things. And from a marketing perspective, the more we can understand our audience’s passions, the better products we can create for them.”
That wraps it up for now, but we will be conducting more interviews – with everyone from individuals seeking a dream vacation to more revolutionary start-up companies – so continue to check our blog and social media accounts to stay up to date on the latest news.
Also, feel free to explore our site or become one of the millions who have started their own crowdfunding campaign. Remember, if you have any questions, you are always more than welcome to drop us a note or simply give us a shout out on Twitter.
Hope you have an amazing weekend!
This is the official blog of Kapipal. Check back often for updates on what's new at Kapipal, as well as ways to make your campaign shine! As always, we value your feedback, so please don't be shy — comments are encouraged!