This is a subject that intrigues many people nowadays. In general, you always think of banks, investors and loans when you talk about financing. But is that really the future? And also, does crowdfunding really threaten to leave all of that as a thing of the past? Let’s analyze the topic a little bit.

Crowdfunding as financing

It’s not quite right to say that collective financing came through the digital age and crowdfunding. Since decades ago, something similar was already being done but not in the same way as today. In North American, it was being called “crowdfunding”. This term began to become fashionable with its implementation on digital Internet platforms.

Digital platforms such as Kickstarter and Indiegogo, undoubtedly popularized crowdfunding. Not only in the United States, where it gained more strength, but in other continents of the world. Like us, in Latin America. Millions of projects and campaigns have been created through these platforms, from which the most remarkable innovations of the 20th century have emerged.

Oculus Rift Crowdfunding
Thanks to crowdfunding, Oculus Rift was created, a virtual reality helmet considered a technological breakthrough. Source: 3DJuegos

One of them was Pilot, an earpiece that translates spoken languages ​​verbally instantly. The success of its campaign is a demonstration of how crowdfunding becomes a modern form of financing. Although this is just one example among an infinity of businesses, causes and projects funded through this system.

But what was there before crowdfunding? Or rather, what are the other alternatives that exist besides it? Because although our eyes aren’t on them, there are other forms of alternative financing. And organizations and institutions around the world that are responsible for promoting them still exist and remain active.

Alternative forms: Are they less viable?

Let’s look closely at the alternative forms of financing that exist today. One of them are start-ups and business incubators. These are organizations that work to accelerate their creation, usually in a period of three to six months. They can take care of many factors, such as the business model. But it can also include financing.

This form of financing is still used today, as are start-up accelerators. Unlike business incubators, seed accelerators can be public or private institutions. But they also have the mission to promote the launch of these start-ups through their financing. Although also through training and mentoring.

Y Combinator Seed Accelerator
Currently, Y Combinator is the best known and most successful start-up accelerator according to the Forbes magazine. Source: TechCrunch

Other financing methods that are still used are seed capital, risk capital and the angel investor. And like the previous ones, they’re still being applied today by entrepreneurs around the world. Which is also valid and feasible to finance those projects that have the purpose of creating a business. Although this is when another important factor comes in.

Numbers are important to evaluate the veracity of the facts. And in comparison to the aforementioned methods, crowdfunding continues to gain momentum as the years go by. Proof of this is a publication by HuffPost, which indicates that by 2016 there were already more than 2000 crowdfunding platforms around the world.

Conclusion

Eric Migicovsky, creator of Pebble and whose crowdfunding campaign was the most funded in the world, has something to tell us. Before reaching success, he tried, together with his team, to finance his idea through Y Combinator, a well-known American start-up accelerator. In which businesses such as Airbnb, Stripe, Reddit and Dropbox were financed.

Through it and some angel investors, they managed to raise $375,000. Although they couldn’t obtain additional funds. However, some time later they decided to start their crowdfunding campaign. And the results were more transcendental, they obtained a total of $10,266,845. An amount definitely higher than that obtained with Y Combinator.

Pebble Crowdfunding Campaign
Pebble was the most funded campaign of Kickstarter in 2012, its success remains a subject of study for experts. Source: Crowdfund Better

In short, entrepreneurship seems to have many more opportunities to be driven by crowdfunding. Considering it’s the preferred option of many entrepreneurs today, who see it as an opportunity to achieve their dreams. The World Bank predicts that by 2025, global crowdfunding investments will reach $93 billion.

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Related: 4 Crowdfunding Campaigns Made By Peruvians

Our dreams lie within crowdfunding…