1.Open a new source of funding, get money quickly without upfront fee and get things done especially when you struggle to get support from conventional big institutions and banks.
2.A successful campaign may attract big investors' attention and lead to even larger amount of funding
Non-financial benefits
1. Profile: gain a lot of attention from public, a compelling project can rise a producer's profile and increase its reputation especially if they succeed.
2.Audience engagement: the project initiator can create a forum in which he can communicate with the audiences. Your investors can often become your most loyal customers through the financing process
3.Feedback: offering the pre-release access to the content, or the possibility to use the beta-version gives the project initiator a good market feedback or we can say it's a good way to test the public reaction.
4.Crowdfunding is great for niche ideas that wouldn’t otherwise have access to a receptive audience or funds
Impact on society
1.good ideas, designs will come directly to the audience, skip distributors and retailers, increase consumer surplus and provider surplus.
2.created a place for dreamers to really make things come true. Isn't that awesome?
everyone has some dreams, fantasy, some of them might just be the next genius idea that could potentially change people's life, with crowdfunding, we won't be worried that these ideas would just die away.
Disadvantages
1.Small dollar amounts. If your crowd funding campaign is successful you will raise small amounts of money from a large number of funders. But for a small business, that's the problem. Instead of raising significant levels of capital from targeted investors the dollar amounts are much smaller. The most successful crowd funding projects don't come close to generating the kind of funds you need to really get your business off the ground.
On top of that, platforms will charge commission.
2.Ignores business models. One of the advantages of pitching your startup to traditional investors is that you gain important insights about your business model. Crowd funding enthusiasts usually lack the expertise and capacity to provide meaningful feedback about your business model. In fact, the limitations involved with listing your request on a crowd funding website make it impossible to adequately describe your company's business structure to prospects.
3.No long-term viability. It's one thing to use crowd funding as a vehicle for resourcing a one-time project or special event. If your company wants to fund a small study about the impact of cell phone technology on frogs in the Amazon, crowd funding is definitely the way to go. But as a long-term funding strategy it's just not a viable for the ongoing resource needs of a small business.
4.Risk of exposure. Crowd funding seems innocent enough. But it's possible that it could expose your business to risks you didn't anticipate. For starters, crowd funding requires you to expose project details on the Internet, potentially giving your competitors inside information about your business. Some people who have tons of money may copy your idea and get things done before you do. In certain situations crowd funding can even expose your company to securities violations. Be careful to protect your Copyright, Patent etc.
5.All or NOTHING: If you don’t reach your funding target, any finance that has been pledged will usually be returned to your investors and you will receive nothing and you may also suffer from reputation damage from a failure of funding
6.Donor exhaustion: if the same network of suppliers is used many times, it will eventually stop giving the necessary support
7.Public fear of abuse: concerns among supports that without a regulatory framework there's the likelihood of an abuse and incorrect use of the funds. This is often happened with something not so tangible such as charity funding.
8. Getting the rewards and returning wrong may cause too much give away to investors.
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