Crowdfunding: Everything you need to know

287

The crowdfunding is a financing technique which is to link entrepreneurs with individuals in order to obtain financial support. This support can take different forms, Crowdfunding by capital investment, Loans or donations.

Some Reminders about Crowdfunding

Crowdfunding is a financing technique that involves connecting entrepreneurs with individuals in order to obtain financial support.

This method of financing is currently in full swing. For project leaders, crowdfunding is an interesting alternative to traditional methods (bank loans, equity investment by an investor, etc.).

The project must be attractive to investors. That convince the investors to join the project. Then, the entrepreneur must surround himself with competent professionals to develop his project in good conditions.

Different forms of Crowdfunding

By Investment

Individuals contribute funds to the project and are granted, in return, securities from the company in which they invest. For the individual, the interest lies in the potential profitability of his investment during the subsequent sale of the securities. However, there is no certainty of realizing again, the project can fail.

For the entrepreneur, the success of the campaign is thus correlated with the quality of his project. In any case, serious platforms only select solid projects. For this, carry out a detailed examination of the project.

This process has its advantages and disadvantages:

  1. It is an inexpensive method of financing. In the event of failure, the investors have no guarantee. The loss is therefore limited for the entrepreneur.
  2. In return, the entrepreneur opens part of his share capital to investors.

By Loans or Grants

Crowdfunding can also take other forms, notably through loan or grant funding

  1. A crowdfunding platform in the form of loans makes it possible to finance a project by obtaining free or remunerated loans from individuals.
  2. A crowdfunding platform in the form of donations makes it possible to finance a project by obtaining donations, with or without consideration.

Crowdfunding Platform: The Essential Intermediary

Crowdfunding internet platforms play the role of intermediary between the entrepreneur and individuals. It is an essential player in the context of a crowdfunding campaign.

It is important to select a platform with a good reputation, to optimize the chances of success of the fundraising campaign. Then, the selected platform must offer an investment method that suits you. Indeed, the models offered are not the same, different possibilities exist.

How to Prepare a Crowdfunding Campaign?

The most important step is to prepare campaign

First of all, the entrepreneur must set the campaign objectives, specify its methods and precisely measure the amount of funding. Establishing a business plan is essential.

Regarding the terms of financing sought, it is necessary to determine:

  1. In the case of crowdfunding by investment: quota of the capital concerned, amount of funding, target audience, etc.
  2. Crowdfunding by loans or donations: loan or donation conditions, amount of funding, target audience, etc.

Then, the entrepreneur must set up a solid and attractive project. An interesting and properly assembled project is essential to plan and succeed in a crowdfunding campaign.

After finalizing dossier, it is necessary to select one or more platforms appropriate to the characteristics of the campaign. If the project is accepted, the campaign can be launched.

Finally, throughout the crowdfunding campaign, communication is very important. A communication plan must be put in place to promote the project.

How to Secure a Crowdfunding Campaign?

To secure a crowdfunding campaign, the entrepreneur must surround himself with competent professionals and secure his project.

The accountant, an essential partner to build a solid case.

First of all, a chartered accountant brings invaluable expertise to precisely determine the objectives and methods of the fundraising campaign.

This professional must intervene in the assembly of the crowdfunding file and in the development of the business plan. He also advises the entrepreneur in the choice of his crowdfunding method (by investment, by loans or by donations).

Finally, the entrepreneur can also be accompanied by a lawyer who is an expert in legal protection on all legal issues related to the crowdfunding campaign. Note that our partner MMA can also help the entrepreneur in the search for aid and subsidies linked to his activity, thanks to his professional legal protection contract.

The insurer, an essential partner to secure the business

Then, the entrepreneur must secure his project and put in place all the necessary solutions. For this, the insurer is an important partner on several levels:

  1. Professional insurance is essential to secure the exercise of daily activity, professional civil liability. This allows the entrepreneur to have adequate guarantees against the risks to which he is exposed in the course of his activity.
  2. As part of future recruitments, he must set up a collective health contract within the company for employees.
  3. Often, the entrepreneur needs additional insurance contracts, such as a provident contract to improve his social protection, especially in the event of prolonged sick leave.

Leave a Reply