What is crowdfunding
Crowdfunding is the latest trend to raise money for different causes in India. People are moving to crowdfunding for various reasons: raising money by sportsperson, artists, medical treatment, new movie producers, even by early stage startups(less than 2 year old) to raise funding.
According to the SEBI Consultation Paper 2014, Crowdfunding in India can be defined as
“Crowdfunding is solicitation of funds (small amount) from multiple investors through a web-based platform or social networking site for a specific project, business venture or social cause.”
Is it legal in India
There are four broad categories of crowd funding: Donor based, Reward based, equity based and Debt based crowd-funding. According to SEBI, Equity Crowdfunding, specifically digital equity crowdfunding platforms, is illegal. Reward-based crowdfunding and donor-based crowdfunding is not.
Rules and regulations
Your campaign idea should be original and well structured.You need to define your project/product in details like planning, budget, estimated execution time and completion time.
Also, one of the major step in crowdfunding is creating two-minutes pitch video. A pitch video is contains important information like why your product/project is good, what is the future, how it will affect society in general, five year growth plans(in case of startups). It is always beneficial to include charts and facts after proper market survey and consumer validation.
Another criteria for your success in raising crowdfunding money is how well you promote your product on social media, in target investors network and capturing public attention. Some campaigns are offering lucrative rewards on particular amount of funding received. Rewards such as early-bird copies, autographed or limited edition merchandize, invitations to the launch, personalized thank you messages, etc. encourage backers to support your project.
Websites offering platform for crowdfunding
Crowdera, Bitgiving, Start51.com, FundDreamsIndia, DreamWallets are some of the websites offering crowdfunding platforms in India. They allow campaign to go for maximum 60 days live to raise money.
India for Sports is a Not-For-Profit Organization dedicated to bring a change in the condition of Sports and Athletes in India through the idea of Crowdfunding.
Wishberry: is exclusively dedicated to funding creative projects – music, stand-up comedy, film production, art, dance, design, photography, publishing, theater.
Ketto: supports fundraisers in three main categories: Community/social projects (NGOs/Non-Profits/Charities), Creative arts (Movies/Music/Theatre/Fashion/Technology) and Personal development (Health/Education/Travel).
FuelADream: It is a rewards-based crowdfunding platform and focuses on creative arts projects, social causes and charities.
Catapooolt: helps fund raisers bring to life creative, sports, and political projects, social enterprises and business startups.
Ignite Intent: India’s 1st CrowdFunding Website to initiate College and Entrepreneurial Projects.
Besides above mentioned websites, many others exist which focus on peer-to-peer lending, supporting rural development entrepreneurs and other projects.
1. SEBI (2014), “Consultation Paper on Crowdfunding in India”, June17, 2014. (http://www.sebi.gov.in/cms/sebi_data/attachdocs/1403005615257.pdf)
Image source: Internet