What is crowdfunding financing model?

Crowdfunding financing mode refers to issuing projects and raising funds through the Internet. Compared with traditional financing methods, it is more open, and the commercial value of the project is no longer the only criterion for obtaining funds.

The advantages of crowdfunding financing mode mainly include the following aspects. First of all, the entrepreneurial threshold of enterprises or company projects based on this model will be relatively low. People often hear the dream of a round entrepreneur, which means "in the past, the threshold for starting a business was high, and crowdfunding helped you lower this threshold that limited your development".

Secondly, the crowdfunding model will also have market research reports. Because the money comes directly from consumers, consumers' right to approve and evaluate the products in this mode is a ready-made market survey in itself, and this survey report can reflect the results of large-scale product launch in the future. Another essential advantage is that crowdfunding itself is a very good advertising platform. When your project financing is successful, it is equivalent to sending an advertising notice to the masses, and regardless of whether the financing is successful or not, your project has been displayed and may be selected by others.

Of course, the crowdfunding model also has many shortcomings. Projects based on crowdfunding financing mode have brought pressure to production. Once your project is successfully funded, you must fulfill your promise to your supporters and complete product development within the specified time limit. Secondly, because it is a crowdfunding financing model, only funds are raised to complete the project. Compared with traditional VC, this model lacks the guidance of entrepreneurship.