Crowdfunding Disadvantages

This essay would be discussing the advantages and disadvantages of crowdfunding. Typically, Crowdfunding is a method of rising capital through the collative effort of friends, family, customers and individual investor to finance a new business (Belle flame et al, 2011, pp6-10). It involves “an open call, mostly through the internet for the provision of financial resources either in form of donation or in exchange for the future product or some form of reward or voting rights”(Belle flame et al, 2011, pp6-10). To express it another way, crowdfunding creates funds for business and start-ups which may be producing movie, song, new invention, product or an idea from many people in small investment by using internet and social media. And also Crowdfunding

Firstly, if any companies are not able to secure the loan from a bank to underpin the business then crowdfunding is the one which not only supports in the capital but aids the expansion of the businesses (My Top Business ideas, nd, online). This means it provides an opportunities to commence a business as well as to expand the businesses in a smooth manner. In addition, crowdfunding play vital role for normal people who want to achieve something and to be accepted both physical and mentally by people but have no income for the startup. According to Mendes-de-silva et al, (2016, pp75-99) “the investor does not expect a direct personal return from the donation”. Moreover, crowdfunding benefits are not only for receiver but also for those who are sponsoring and it will be non-profitable such as receiving credits, rewards and gifts like first pieces of the product, dinner and meeting with developer. Secondly, it provides an awareness systems for the entrepreneurs before the launch of the business (MyTopBusinessideas, nd, online). This means investors become automatic ambassadors for business. Thirdly, it helps in the feedback of the company Macht (2014, pp1-14) In addition, it helps to examine the feedback of customers, which result to improve the products and implement it as per the customers and the other companies as

Firstly, it might effects on the reputation of the companies as if the decision may get flop if fundraisers and entrepreneurs choose the incorrect decisions for the businesses (Macht, 2014, pp1-14). In case of well-known organization crowdfunding would be the worse decision for raising funds, it’s also impact on goodwill of the company. Secondly, it is positivity to get a good contributor quickly (MyTopBusinessideas, nd, online). Nevertheless, the contributors may get pledged their support for the business in a timely manner (MyTopBusinessideas, nd, online). Thirdly, it may get adverse effect on the other financing options as crowdfunded are usually indebted to large numbers of investors each with tiny stakes in the business (MyTopBusinessideas.com, nd, online). Belle flame et al (2011, pp6-10) mention that “Entrepreneurs may be worried that competitors could access the information published on the website”. It would be better to say that showing the idea risks other copying, also internet crowdfunding is not safe to raise fund it can create difficult situation for the business. And also if the target amount of business is not reached, investor claim for their money back and business goes away with empty hand .Crowdfunding included large number of investors is the fact that managing many shareholders tends to be time consuming and challenging (Dresner, 2014, online). Different investor have