There are many issues that can come with just about any investment opportunity you pursue. But you may have tuned into the buzz about crowdfunding and you may think it seems risk-free when compared to other financing options, such as traditional bank loans. However, as with anything else, there are a few hazards you should be warned about before choosing this method.
1. Trust
Companies just starting out don’t have enough brand credibility to appeal to investors. Without that trust, it’s hard to convince anyone of your ability to meet targets.
2. Choose the Right Platform
Choosing the right platform is vital. You should consider:
- # of visitors the platform attracts
- Types of visitors it attracts
- Costs associated with running the campaign
- Terms and conditions
3. Realistic Targets and Deadlines
It can be tough to set up the right targets and a timeline to achieve your goals. Failing to get the setting right, you may not be able to get enough attention to your campaign.
4. Building Interest
Be sure to build interest in your campaign at least four months prior to the start of your campaign so you can get an initial big boost to your goal.
5. Fulfillment
Consider how you will approach fulfillment, as your brand image depends on your ability to deliver the crowdfunding goal and provide contributors with rewards in a timely way.
6. Copyright Issues
You don’t want anyone to steal your ideas and then kick start their own projects, thereby beating you to market. Use private chat areas to discuss projects and non-disclosure agreements, and constantly monitor who is viewing your data.
7. Managing Compliance and Accounting Issues
You may wonder if funds should be declared as an income or as capital. The answer will vary by business, so be sure to seek out a highly qualified expert to guide you.
