Using the Internet to Get Money to Start a Business

Another alternative way to get money to start a business is to call on the internet for help.  These days people will call on the masses online when they need help.  Some of these are people in need of medical supplies; others are needy individuals who barely have the clothes on their back, while others are businesspeople who are attempting to live the American Dream through crowdfunding, peer-to-peer loans, and incubators.  The Internet is a very fast and cheap way to quickly raise money and fame for any business project.

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Crowdfunding

The web has become a way of fundraising through the netizens to get money to start a business.  One popular crowdfunding platform is Kickstarter, where everyone from business startups to artists to charities to needy people have been able to ask for help.

Some Kickstarter campaigns are used to help aid the development of independent movies and videogames.  Overall Kickstarter has gained donations which are worth more than $1.6 billion for over 200,000 projects.  81,000 of those projects have been successfully financed.

One example of crowdfunding from Forbes is the Oculus Rift VR helmet.  Its campaign raised over $2.5 million in 30 days, and was even acquired by Facebook.  Although the $2 billion purchase was controversial to the donors to the Oculus group, they still expressed a desire to benefit from the VR helmet’s success.

There are rules to crowdfunding when one needs to get money to start a business.  Sometimes the money is held for use until the goal money has been raised.  Otherwise, the pledges are given back to the donors.  Additionally the fundraising method takes a percentage of the money so they can keep the servers going themselves.

The downside is that not all crowdfunding attempts are necessarily successful.  Another popular crowdfunding website is Indiegogo, where the company Canonical tried to raise $32 million to create a cutting-edge smartphone that ran both Android and Ubuntu Touch operating systems.  They only raised $12.8 million instead of their target, and thus did not receive any of their donations.

There is a method to the crowdfunding madness: The funder has to have a good story, a good reason to be, in order to attract people to help them when they want to get money to start a business.  Small businesses might give t-shirts as an incentive to get people excited.  Other incentives include a free sample.  The person holding the fundraiser also needs to show the public theire own commitment to their appeal so that the supporters know that you are something legitimate.  A video is a good way to get people interested in your cause.  You will want to show the time, work, and your own personal investments.

Here is a list of crowdfunding platforms:

  • Kickstarter
  • Rockethub
  • Crowdrise
  • Crowdfunder
  • Somolend
  • Invested.In
  • Indiegogo

Peer-to-Peer Loans

The first idea that springs to mind with peer-to-peer is peer-to-peer filesharing.  Peer-to-Peer also includes businesses as a way to get money to start a business, and is a way to borrow money directly through a person to circumvent banks or investment companies.  It is shortened to P2P.  One way to do P2P loans is through a platform like the Lending Club or Prosper.  The user says the amount they want, as well as why they need a loan.  An investor agrees to give the loan, and then the loan is paid back monthly using the website.

There are many advantages to a P2P loan over a bank loan: the interest rates are lower, there are less fees, and it is very flexible.  Its only requirements are a good credit score, and you have to keep in mind that credit score will be damaged if you can’t pay it back.

Incubators

These incubators aren’t the ones used to hatch baby chickens.  This is a business incubator, which is an institution committed to support new companies when a business needs to get money for startup costs.  Business incubators include universities, government bureaus, and firms who want to support new companies by helping the entrepreneurs meet and greet, market their business, and investments.

There is a long process of applying for an incubation program.  The businessperson must show that their business will be successful in order to get the incubators interested in working with them.

Conclusion

Starting a new business is a serious venture.  It takes a lot of planning, time, work, and money.  A budding entrepreneur has to find the pros and cons of the different funding options, and to find which one best suits their needs in order to get money to start a business.  They have to keep in mind their total funds, interest rate, and how long it would take to pay one off.  A video for advice is found here:

The good part is that many businesses have many sources of funding.  One major source of a beginning fund might from a bank or an SBA loan, while the other sources might be from family and friends, selling assets in your home, the home itself, or your savings, in order to make your American Dream come true.  Thanks to the Internet, Peer-to-Peer loans and Kickstarter mean that businesses have better options at the ready.