Another way to get investments in business in Russia is crowdfunding. To do this, you need to present your business idea on the Internet on one of the crowdfunding platforms. In addition, indicate what obligations you are taking on towards investors. Specify what future investors will receive by providing financial support to your startup.
On such platforms, both legal entities and individuals can act as investors. Anyone can invest a small amount in a project they like, because it is not for nothing that crowdfunding literally means “crowd financing”. On such platforms, you can find both investments in small and medium businesses and funds for scaling a successful company. Crowdfunding is suitable for projects in any field of activity.
The ability to raise funds stockholder data package through crowdfunding is usually limited in time, for example, a few months and a fixed amount, after which the collection can be closed.
Crowdfunding platforms
You can offer investors the following options:
Manufactured goods from the first batch . As a rule, unusual goods are presented with the help of crowdfunding, which make people want to have them. So that a person can get them as soon as possible, before the start of mass production, you can offer the investor the product itself and its components. Many popular crowdfunding platforms work on this principle, such as Kickstarter, Indiegogo, Russian platforms Boomstarter, Planeta.ru and others.
Example: You have come up with a unique automated vegetable peeler with interchangeable attachments for different types of vegetables and fruits. The first investors who contribute $130 will receive a free vegetable peeler eight months later, when production is launched, at a discount of $70 from the planned retail price of $200. Investors who contribute $160 will receive a vegetable peeler and two additional interchangeable attachments for exotic fruits. Since the cost of sending the product to each investor after production will still be lower, this is a fairly profitable way to raise funds.
Irrevocable donation. You may not offer to take on any obligations, but arrange investments in the desired business in the form of voluntary assistance. In this case, investors can contribute any amount. Donation-based crowdfunding works especially well for social and educational projects or those related to medical assistance or the elimination/prevention of emergency situations.
An example of this situation is GoFundMe. This method is also used on those platforms where the reward method is used in parallel, for example, on Boomstarter and Planeta.ru. Sometimes donors are offered a symbolic reward: a certificate, a souvenir, free participation in a charity concert, etc.
Example: You are going to open a shelter or rehabilitation center for dogs, where the goal of making a profit is not the main one. You need funds to create enclosures, buy food, and other expenses. On the crowdfunding platform, you describe why your project is important and useful for the region, and assign donation amounts. To those who donate up to 1,000 rubles, say: "Thank you very much." To those who donate 2,000 rubles, you give a logo of your shelter, to those who donate 5,000 rubles, you send a calendar with photos of dogs, etc.
Non-refundable donation
P2P lending (debt crowdfunding). You can raise funds for business development using a loan that is issued to you not by a bank, but by another company. This method, when an investor can give a loan to an individual or business, is called P2P lending. The process occurs through an intermediary service that operates according to certain rules and helps investors and entrepreneurs find each other.
P2P platforms check the borrower, including his passport data, income and assets (real estate, cars, etc.), and also assist in collecting funds in case of overdue payments and provide their platform for conducting secure payments between the parties. The difference with a bank loan is that the borrower pays a lower interest rate, and the investor has the opportunity to receive a higher profit than if he used a bank deposit or savings account.
Examples of P2P lending platforms include Lending Club and Prosper.
Shares. There are also equity-based crowdfunding platforms, such as OurCrowd. This is a type of crowdfunding where investors can get a piece of ownership in a company through shares. Although their initial investment is not returned, they will receive a share of the profits if the company is successful. Equity-based crowdfunding is quite risky for investors because there is no guarantee of a return on investment. Startups do not pay dividends or interest at the initial stage, and there are no legal guarantees.