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Finding funding for business endeavors is probably the hardest part of starting a business. This is especially true if you are holding out hope for venture capital firms to take interest in your business ideas. But, it has gotten easier in recent years. This is thanks, in part, to the rise in alternative financing options available to entrepreneurs like you. Cloud funding, crowd funding and micro lenders are some of the alternative financing sources you have available at your disposal. But, what are the differences between all of these options? You need to learn the differences between cloud funding vs crowd funding to help you pick the best lender to fund your business pursuits.
What Is Crowd Funding?
Crowdfunding allows you to fundraise for business using a website and as many lenders as it takes to reach your goal. With crowdfunding platforms, you post your business plan on a fundraising page specifically for your goal. Then, any number of individuals can help you finance your new business venture by lending small amounts of capital until you reach your goal. With business crowdfunding, you leverage the power of a large network of investors and individuals to acquire the startup capital you require.
What Is Cloud Funding?
Cloud funding, on the other hand, is just a misnomer for crowd funding. Crowdfunding platforms utilize the cloud to store data. Thus, they have earned the misnomer of cloudfunding. Cloud funding platforms are simply those crowdfunding platforms that are powered by the cloud. Cloud funding is also the name of a particular crowdfunding campaign that has already achieved its campaign goal. However, the cloud funding misnomer has gained plenty of steam. It may soon just be another moniker for the many types of crowd financing tools available online that help you get a little bit of free market research while also finding the funds to open a business.
What Is Crowd Sourcing?
Crowdsourcing is yet another type of crowd-based effort that can benefit entrepreneurs like yourself. Crowd sourcing is like crowdfunding. But instead of providing access to monetary funds, crowdsourcing helps you obtain services, ideas or content. Crowd sourcing tactics help entrepreneurs solicit contributions from any number of individuals. Wikipedia is an excellent example of successful crowd sourcing strategies. The website is an entirely crowd sourced encyclopedia that is used by millions of people every single day. Entrepreneurs like yourself may find that a decision to crowdsource services, ideas or content early on in business may help you keep startup costs low.
Types Of Crowdfunding
There are two types of crowd funding available for you to leverage. Depending on your business model, one crowdfunding method may be a better than the other. Rewards crowdfunding is the sort of crowdfunding you most often see making the rounds on Facebook or similar. This type involves individuals pledging money in exchange for a pre-sold product or service. That helps you avoid incurring debt or sacrificing business equity. Equity crowdfunding, on the other hand, requires backers to receive company shares in exchange for their monetary support. This is important to note when considering alternative financing sources for your future business endeavors.
Cloud Funding Platforms
There are a number of top crowdfunding platforms that utilize the cloud to connect entrepreneurs with the startup financing they need. Unfortunately, many crowd funding websites also charge fees for use of their services. However, there are still some options that do not take a percentage of your crowdsourced funds. These will be the best options for entrepreneurs to consider when trying to build a solid foundation for the future financial success of your business.
If you are an entrepreneur starting an LLC, finding the startup funding you need to make your dreams a reality is probably your single biggest hurdle. Thankfully, there are many different types of business financing available to you. Crowd funding has exploded in popularity, so much so that it even earned the misnomer of cloud funding. You can use crowdfunding solutions to fund your business cloud providers. But, cloud funding is really just the moniker given to crowdfunding platforms that use the cloud to store data. Consider how you will leverage these alternative financing sources to fund your new business startup. Then, you can get to work building your new business from the ground up once you have the startup capital in order.
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