I about to build my campaign. The type of the campaign is crowd funding. Please guys help me to understand the risk behind crowd funding.
Yes! As you know ,there are no business without risk or risks.There are many advantages to crowdfunding, but there are also potential risks that you should be aware of.
These are some of the risk associated withcrowdfunding,
1.There’s no guarantee you will reach your target.
Much like any other business venture, there is a risk of not succeeding. If you do not reach the fundraising target, money collected during your campaign will have to be returned to investors.
2. Your intellectual property becomes public.
Your ideas are online for lots of people to see and there is a risk of someone duplicating your proposition.
3. Underestimating the costs.
It is common to underestimate just how much time and resources crowdfunding takes. Some forms of crowdfunding may create additional costs. For instance, in case of equity crowdfunding, administrative costs may increase along with each issue of shares. You may not have enough capacity to deal with new investors, to provide ongoing information about the project or to process corporate rights of shareholders.
4. Reputational damage.
The market is now quite competitive and you will likely have experienced investors looking into your offering. Any sloppiness, errors or under-preparation will reflect badly on you and your project or business.
