Crowdfunding and attracting investments

Their goals can range from charity to supporting creative projects, scientific research, or start-ups. The specialist notes that crowdfunding is a collective investment in business, ecology, development of new technologies, etc.

From idea to reality: How does crowdfunding work?

The crowdfunding process is a sequence of steps. It starts with the author’s idea and ends with the development of the project with the help of investor support. Here are the five steps of crowdfunding that Sergey Kondratenko highlights:

1. Author’s idea:

• The founder is developing an innovative idea for his startup, the task is to raise a certain amount for its development.
• It is important to clearly describe the idea, demonstrate the benefits of the product and interest potential investors. In this case, it would be a good idea to create a video with a detailed description.

2. To start collecting, select a platform:

• The author chooses a suitable platform depending on the startup’s goals.
• Draws attention to its specialization and opportunities to reach the international level.
• Uploads the project to the platform and begins the fundraising process.

3. Introducing investors to the project:

• Investors study the presented startup for potential investment.
• The minimum contribution amount is determined by the project, and investors can count on an appropriate reward, if any.

4. Fundraising:

• Interested investors invest in a project for potential benefits once it is launched.

5. Project realisation and startup development:

• If funds have been allocated for the development of a startup, then they can already be used for their intended purpose.

Sergey Kondratenko emphasizes that this process demonstrates the importance of interaction between the founder and investors. It creates an opportunity for voluntary investment and joint participation in the implementation of promising startups.

Sergey Kondratenko: Dynamic growth of crowdfunding: variety of types of project financing

Crowdfunding platforms bring together founders and investors. Startup participants outline in detail the idea, stages of implementation, the required amount to raise funds with detailed calculations and other key details. Sergey Kondratenko believes that this is an effective way to form capital, although in most cases funds are limited to contributions only at the startup stage.

According to expert forecasts, the volume of the crowdfunding market should increase from $1.30 billion in 2023 to $2.69 billion by 2028. A similar trend is expected at a CAGR of 15.70% from 2023 to 2028. This dynamic growth is the result of interest in crowdfunding as an effective tool for attracting funding from a wide audience. What opportunities does this funding provide? Examples of its diversity, depending on the direction of the startup, are given by Sergey Kondratenko.

• Crowdfunding with rewards (Reward Crowdfunding): Investors receive bonuses or rewards in return for their support. Bonuses may include media mentions, advertising, commendations and other perks.
• Equity crowdfunding (Equity Crowdfunding): Investments are made in exchange for a stake in a startup that provides shares to a large number of shareholders.
• Debt crowdfunding (Debt Crowdfunding), as Sergey Kondratenko explains, is a form of debt participation in financing a startup. Investors provide funds in the form of a loan and return expect a full return of their investment or share in the project.
• Donation-based Crowdfunding is used to support non-profit projects. Investments are voluntary donations with no expectation of material reward.

Sergey Kondratenko draws attention to the fact that when choosing a platform, it is important to carefully study its rules, reputation and number of successful projects to avoid possible risks.

Examples of successes and failures, prospects for the development of crowdfunding

Since the advent of crowdfunding, many creative minds and inventors have been actively directing their efforts to promote their startups on various thematic platforms. At the same time, they strive to obtain the necessary funding to bring their ideas to life.

According to Sergey Kondratenko, in the world of crowdfunding there are many successful stories where ideas have found support and approval from society. There are also even more ideas that have failed to interest investors.

– Examples of such frankly unsuccessful startups on crowdfunding platforms serve as a clear lesson that not every idea is doomed to success. Even if attention is paid to it in the virtual world of financing, comments Sergey Kondratenko.

By contrast, the expert talks about a new, potentially successful investment. According to him, today there is a unique crowdfunding platform focused on raising funds to support startups and their ecosystem.

– As an illustration, in August 2023, the Dutch investment company Symbid was acquired by SeedBlink, an investment platform for software developers. This event not only strengthens the position of venture partners, but also expands the influence of SeedBlink. This promising platform is focused on consolidating and developing infrastructure for equity investments in European digital startups, emphasizes Sergey Kondratenko.

You don’t need to be a fintech expert to understand the conceptual difference between a failed startup and a potentially successful one. It lies in the idea itself, its social usefulness, necessity and compliance with world trends. The specialist gives convincing advice for beginners – not to exchange ideas.

– The idea of ​​your project must be much more meaningful than a T-shirt with emotions if you want it to have the right to live as a successful project. That is, generate a great idea, package it in an original presentation and send it to the desired crowdfunding platform. Act meaningfully, with a perspective for the future, then you will have every chance of success, Sergey Kondratenko shares his practical experience.

Sergey Kondratenko is a recognized specialist in a wide range of e-commerce services with experience for many years. Now, Sergey is the owner and leader of a group of companies engaged not only in different segments of e-commerce, but also successfully operating in different jurisdictions, represented on all continents of the world. The main goal is to drive new traffic, create and deliver an online experience that will endear users to the brand, and turn visitors into customers while maximizing overall profitability of the online business.

Foto: Scott Graham auf Unsplash