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Benefits and Drawbacks of Crowdfunding for Startup Businesses

Benefits and Drawbacks of Crowdfunding for Startup Businesses

Posted On: July 20, 2021 by Falcon National Bank in: Invest your Money | Investment Banking, Manage your Business | Business Banking

A growing trend in raising funds for a business is something called crowdfunding. You may have heard about this idea before: asking friends, family, and even strangers to invest in a business idea or help raise funds for improvements, expansions, or other business expenses. On paper, it seems easy. A business can start by signing up with a crowdfunding platform, list some information about the business, and simply watch the money roll in! Of course, there is much more to it than that. Even though crowdfunding efforts have been popular lately, it doesn’t mean they are always successful–or even a great idea–for all business ventures. How Does Crowdfunding Work? There are two main types of crowdfunding approaches: Rewards-based and equity crowdfunding. Rewards-based efforts provide incentives for investors to donate, such as samples of the products or advertising sponsorships. These efforts are a good way to raise money for your future endeavors without giving away

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