Is Crowdfunding an Optimal Source of Financing?

Crowdfunding is a big deal these days. Many people have spoken highly of crowdfunding’s ability to get people involved and raise a lot of money for an important project in a very short amount of time. Popular crowdfunding websites like Kickstarter, Indiegogo, and Tilt make it easier than ever for individuals, businesses, non-profit groups, community organizations, schools, and other agencies to connect with potential investors. While this particular form of fundraising has several advantages, it is not always an ideal way to cover business-related expenses. Instead of forcing crowdfunding to adapt to the needs of the business world, consider taking a second look at more traditional financial solutions.


Businesses Require Long-Term Solutions

Crowdsourced funding has several disadvantages when it comes to funding ongoing business operations:

  • While there is the potential to raise a lot of money through crowdsourcing, there is no guarantee of how much will be raised or how quickly. A campaign could still fail to reach its goal.
  • Websites that host crowdfunding efforts charge a fee for each campaign, generally a percentage of the target amount.
  • Most campaigns offer supporters some form of incentive or gift to thank them for participating. Organizing these incentives and perks is a major undertaking and will require dedicated time, money, and labor.
  • Crowdsourced funding generally works only once; supporters are reluctant to give to a project repeated times.

As you can see, crowdfunding is simply not a sustainable or reasonable method of securing funding required to run a growing business.

Is Factoring Helpful?

Invoice factoring keeps you in control of your cash flow. Instead of trusting that altruistic strangers will choose to help your organization, you can work with a trusted factoring service that offers you a fair price up front. Factoring can be done on an on-going basis, so as to ensure a reliable source of working capital. And unlike crowdfunding, factoring does not require you to give up any equity stake in your organization.

Discover the Value of Your Invoices

To learn how much your invoices are actually worth, just use our convenient online rate form.