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Why Crowdfunding Leaves Other Growth Tactics in the Dust The World Bank has predicted that global investment in crowdfunding will hit $93 billion by 2025. What will you do to get in on this trend?

By Pratik Dholakiya Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.


When you're a startup, you're almost always worried about the overall growth of your business. While raising enough capital is a huge concern, other factors crucial to growth include research, marketing outreach and efforts to spread awareness about your product/service.

Related: Five Ways to Learn the Nuts and Bolts of Crowdfunding

For these growth purposes, crowdfunding can easily be one of your most powerful weapons for business growth. In fact, the World Bank has predicted that global investment in crowdfunding will hit $93 billion by 2025!

Apart from a monetary perspective, however, there are multiple reasons why crowdfunding is such a strong strategy for startup growth. Let's examine the significant ones:

Holds an edge over traditional fund-raising methods

Crowdfunding is a fund-raising tactic that has reaped significant benefits with the rapid sophistication of technology and the internet. Everyone is familiar with popular crowdfunding sites like Indiagogo, Crowdfunder and ,of course, Kickstarter.

Traditional financing options come with their own set of stressful demands, such as loan applications and the search for credited investors. In comparison, setting up an effective crowdfunding campaign through modern-day platforms can go a long way toward helping you not only acquire capital, but also get your message out to your target audience and beyond.

If you've browsed through Kickstarter, you've certainly noticed that nearly all the campaign videos you see are of incredible quality. While video and other startup costs to getting your campaign on to these big-name sites will likely set you back, it's a necessary investment, because it can expose your product or service to vast audiences in a captivating fashion. The results can be momentous.

Related: How to Decide Whether to Crowdfund or Bootstrap Your Business

Gets you much-needed social proof

When using popular crowdfunding platforms, you are exposing your message to all kinds of new audiences. If done correctly, a crowdfunding campaign can result in solid validation and social proof that will be instrumental in facilitating your business's growth story. Social proof can be used as a powerful psychological trigger that motivates viewers to buy.

These days, social proof is an essential factor in gaining market traction. It ushers in opportunities to generate increased media attention, conversions and, eventually, the interest of potential investors.

Earns you loyalty

The people who back your ideas or business usually go on to become your early adopters and potential brand advocates. This is because, through your crowdfunding efforts, you have managed to earn and maintain people's trust in your abilities to the extent that they're willing to put their money into your idea.

Because crowdfunding is typically done in the early stages of a business operation, it is a golden opportunity for you to earn loyalty before your official product release. Your early adopters will then keep the momentum going once your campaign winds up, by promoting/sharing your story with others, both in person and on the web.

However, simply releasing a campaign does not earn loyalty. Your messaging must present a unique selling proposition that convinces viewers that your product or service will improve lives.

Take Lifestraw, for example. Its Indiegogo campaign was able to present a clear emotional appeal, considering that the product would make contaminated water safe to drink for the victims of Typhoon Haiyan. It would solve all kinds of problems in struggling countries across the world that lack easy access to clean water.

Is cost-effective

Crowdfunding doesn't always have to be a huge initial investment. And while featuring your brand in a press release, blog or social media post are strategies that may be cheaper, they will take you longer to gain traction. Besides, crowdfunding will help you create long-term awareness for your startup.

Another way to get discovered (especially by millennials) is by featuring yourself on discovery apps such as Gadget Flow. These types of programs help users stay informed about the latest crowdfunding projects across the market. Gadget Flow, in fact, can work wonders for your venture, as it offers a simple, easy-to-navigate interface with support for high-resolution images, video, and even augmented reality!

This innovative (and affordable) crowdfunding technique can act as a fruitful marketplace for potential investors or backers to browse and try out your products before they offer support.

Allows you to start pre-selling

A well-thought-out crowdfunding campaign can generate all sorts of interest and enable you to pre-sell your product/service from the earliest stage of business. This is because (thanks to your campaign) your early adopters are already sold on your concept or business idea before it even hits the market. This is a very common practice seen in board-game campaigns on Kickstarter.

Crowdfunding also gives you great market research. Interactions with your community can serve as valid indicators of the general demand your product is generating. Depending on the number of pre-orders/inquiries you get, you can gauge whether or not pursuing your idea further will be sustainable for your entrepreneurial ambitions.

Helps you refine your Idea and gives you authentic feedback

Got an idea that you're ready to implement, but feel unsure of the loopholes it may have? Put your crowdfunding campaign to use. These campaigns attract vocal feedback, allowing you to engage potential customers and receive comments and critiques about your ideas early on.

This type of input can shed light on aspects of your business plan that you never thought of, in turn helping you to refine your current idea in line with customer preferences. This "For the people, by the people" mentality of business is becoming more commonplace.

Related: How to Launch a Successful Crowdfunding Project

In sum, crowdfunding is traditionally perceived as a means to raise the initial capital needed to get a new business off the ground. However, as described here, other benefits can be reaped from it, as well. In fact, crowdfunding has proven to be a smart way for entrepreneurs to authenticate their business, win early adopters and receive the kind of exposure they need to grow holistically.

Pratik Dholakiya

Founder of Growfusely

Pratik Dholakiya is the founder of Growfusely, a content marketing agency specializing in content and data-driven SEO.

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