Are you a small business owner in the Philippines looking for ways to get your business off the ground? If so, you may be interested in crowdfunding.
Crowdfunding is a way of raising money from a large number of people, and it can be a great way to start a business and get the attention to build a customer base. In this article, we’ll explain how crowdfunding works and give you tips on how to successfully crowdfund your online business.
Let’s jump right into it!
Key Takeaways
- Crowdfunding is a great way for small business owners, especially those who lack credit history and other requirements for a business loan, to raise funds for their business venture.
- There are four types of crowdfunding—reward, donation, lending and equity. With donation-based crowdfunding, donors don’t require anything in return at all.
- Crowdfunding doesn’t end even after the campaign period closes. Don’t lose sight of your goals and make sure to follow through on your promises.
What Is Crowdfunding and Why is it Good for Startups?
Crowdfunding is the process of raising money from a number of people, typically in the form of online donations.
It has allowed small business owners to finance their new business ventures—like a shoe store exclusive for handcrafted men’s boots or an online fruit basket delivery store—by “soliciting” small amounts of capital from a large number of individual investors.
It is a way to raise capital without going through traditional channels such as applying for a business loan from banks. Instead, they turn to the general public, using the internet to solicit funds.
Crowdfunding has become popular in recent years, as it offers a way for people to support projects or businesses that they believe in. The transaction value of crowdfunding in the Philippines is expected to reach a total amount of $2.87M USD by 2027.
The Benefits of Crowdfunding
Crowdfunding in the Philippines offers some advantages over traditional methods of financing.
- Promotes your business. Crowdfunding in the Philippines can be deemed as your first marketing campaign. It is a great way to get the word out about what you have going on. People will be more likely to share it with their friends and family, which means that not only do you increase your chances for donations or investments from these individuals but also create awareness and attract customers to your business.
- Relatively easy to acquire funds. This is especially true for those who just started their small business and lack credit history and other requirements of a business loan. With crowdfunding, all you have to do is share your business idea and its benefits through a well-crafted pitch. You can even post images, videos, or other proof of concept on the platform. Potential investors and donors have the time to read through it and if they like it, they will swarm to your feet and support your business venture.
- Little to no debt. There are even some types of crowdfunding that don’t require anything in return at all. Also, not going through loans or monthly payments is one of the major benefits of crowdfunding in the Philippines.
The Challenges of Crowdfunding
Despite its benefits, crowdfunding in the Philippines also comes with challenges.
- Creating the right message. To have a successful crowdfunding campaign, you need to relay the right message that will drive interest into your business idea. You also need to know how to reap the benefits of social media marketing like using Facebook and Instagram to drive potential investors to your crowdfunding page.
- No guarantee. There is no guarantee that the project will be successful in raising funds. It depends on the amount and how many individuals or groups are contributing. If it’s not enough then you might not achieve your fund goals.
Lesser control. There are some types of crowdfunding that requires you to give equity in the company. This could mean lesser control of your own business and these investors or donors can now have a say in your daily business operations.
What to Do After the Crowdfunding Campaign
Take note that just because the campaign is over doesn’t mean your work has ended, too. There are things you still have to do after the crowdfunding campaign in the Philippines.
First and foremost, you need to thank the donors and investors. They are the ones who helped you reach your fundraising goal, and they deserve your gratitude.
You should also keep them updated on how you’re using the money and how the project is progressing. This will help build goodwill and could encourage them to back your future crowdfunding campaigns.
It’s also important to see through your promises. If you said you would deliver certain rewards to donors, make sure you do so in a timely manner.
Donors are investing in your business idea because they believe in it, and if you let them down they won’t be as likely to support you in the future.
Lastly, spend time preparing your eCommerce site. Design and develop it so you can begin accepting and processing orders. If you don’t know how to create a website for your business, Prosperna can help you launch your very own online store, design it however you want and start selling in just 30 seconds.
Crowdfunding can be a great way to raise money for your business venture, but it’s important to know what to do afterwards in order to maximize its impact.
Crowdfunding in the Philippines FAQs
Do you pay back crowdfunding?
On most types of crowdfunding (except lending-based), you don’t have to pay back the money or pay interest. Crowdfunding works more like a grant than a loan.
Is there crowdfunding in the Philippines?
Yes, there is. Some of the popular crowdfunding platforms in the Philippines are Investree, GoGetFunding, and The Spark Project.
Is crowdfunding legal in the Philippines?
Yes, it is. As a matter of fact, the Securities and Exchange Commission has rules and regulation on crowdfunding in the Philippines. This ensures that all parties involved will be duly protected.
Final Thoughts
While there are some risks involved, crowdfunding in the Philippines provides a way for small businesses to tap into a larger pool of potential investors. With a little effort, you can raise the capital you need to get your business venture off the ground and see success.
Have you tried crowdfunding before? What was your experience like? Let us know in the comments below.
Further reading:
- How to Impress Potential Investors
- How to Register Your Online Business
- SDR Outsourcing During the Pandemic
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