Crowdfunding - An Innovative Way To Fund Your Startup [Guest Post]

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Crowdfunding - An Innovative Way To Fund Your Startup [Guest Post]

May 16, 2012

About the author:  Andrew Rachmell is co-founder and VP of Business Development of, a crowdfunding web site dedicated to helping entrepreneurs raise capital to start or grow their business.  The site has been featured in the Wall Street Journal, Entrepreneur magazine, Inc. magazine, Reuters, The Huffington Post and other business publications, as well as on MSNBC.

So you have an idea to expand your business but you’re not sure where to get the money.   You would rather not take a cash advance on your credit card and pay high interest, and your local banks don’t cater to small business loans (not to mention they may require a personal guarantee on the money).   So where can a small business or self employed entrepreneur go to obtain $5,000 or $10,000 in 45 days or less?

Crowdfunding may be your answer and the best part is you don’t have to give away equity of your company or pay back any of the folks who support your venture.   With donation based crowdfunding, those who support a project don’t expect equity of your company or a financial return on the money they contribute.   For many a “thank-you” is enough as they simply want to support their friend or colleague.   For others, they appreciate receiving the cool rewards - like a tee-shirt or perhaps the new software or gadget your venture may create – in exchange for their donation.

Crowdfunding is based on the premise that it’s easier to raise a little bit of money (literally $25, $50 and $100 at a time) from a lot of people, than finding one person to write you a big check.  The concept is not new but it is becoming more popular with the advent of social networking and the ability to reach folks through the click of a mouse.  It also helps to eliminate the awkwardness of asking for money from those you know face to face. 

Here’s how it works:  

You as an entrepreneur post for free on a crowdfunding site like and select a period of 30, 45 or 60 days for your fundraising initiative.  You receive a dedicated page to tell your story (using text, photos and/or video) to your network of family, friends, peers and potentially all viewers of the site.  Funds are collected through the crowdfunding platform and once you reach your funding goal and/or time limit (i.e. 30 days), the pooled capital is released (less a 5% platform fee and Pay Pal payment processing fee of 2.9%).  The peerbackers' team also offers entrepreneurs support and advice during the posting process to help you maximize your fundraising efforts. 

Posting on a crowdfunding site is a dynamic way to tell your story, attract funding, as well as generate buzz and win your first customers.  For many entrepreneurs, crowdfunding is a great way to secure pre-sales by using their product or proto-type as the ‘reward’ in exchange for a backer’s donation.  

Getting started is easy.  Just register on a crowdfunding site like and complete the project template.   Within a few hours you could be on your way to reaching your funding goal.    

If you’re passionate about your business idea, crowdfunding may be right for you.  If you would like to know more about crowdfunding and some great tips to maximize your campaign, please register for the webinar presented by the co-founders of peerbackers at 1:00 PM (EST) on May 23, 2012. Please click here to register. 

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