Move Over Kickstarter!

There's a really great article in Entrepreneur magazine that talks about the rise of Microfunding in local communities.  Today,  a lot of young start-up businesses, with the help of the internet are taking capital into their own hands, literally. Crowdfunding sites such as Kickstarter are growing increasingly popular around the world allowing young professionals to cut out the middle man and get direct access to funds for their creative projects/businesses. With the success of such efforts, now local business men and women are working together to lend a hand (oh and a few big bucks) to helping those on the path of starting a business. The new idea is called microfunding and the main difference between crowdfunding and microfunding, as the name implies, is obviously scale.  'Crowdfunding platforms such as Kickstarter and Indiegogo accept almost any kind of campaign and permit donations from all over the world, whereas microfunding operations deal with smaller amounts of money and seek to have a more local impact." These microfunding ventures are made up of business men and women in a local area who put their money together once a month and extend it to a person/project of their choice, and usually with no strings attached. They thrive off of ideas, and want to help fund the voices that aren't always heard.

Comparing the two, I can see where microfunding may have its advantages. The first being that "with local businesses, there's more knowledge of the market, so investors have a good sense of what would do well. " This also helps to reverse the myth that small businesses are risky; especially if you consider the performance of the stock market over the last few years. Establishing and catering to a niche market with a small business may be the best idea yet. Secondly, most members of these microfunding groups see money as just part of their contribution.  With the majority of the members having "deep networks in their respective fields, they also provide guidance to grant recipients and connect them with valuable contacts." This I think is the biggest advantage because you're in the same general area of your investors you now have the advantage of a personal relationship.  You can develop mentors, and meet people who can be of benefit to your business/project.

Have you thought about trying out crowdfunding to get some extra money for your business? What about microfunding? If so - please share your experience! and if you have not given thought to either of these, or maybe are just learning about the options available - do you think it's  worth a try?

Tiffany Nicole.