Crowdfunding Business and License Requirement

Narendra Kumar

07 Oct, 2019

What is Crowdfunding Business?

Crowdfunding Business is that form of business in which finance is raised by a large number of people, each person contributes a small amount of money.

There are various types of crowdfunding:

• Reward Crowdfunding.
• Debt Crowdfunding.
• Equity Crowdfunding.

The business of crowdfunding is growing all over the world. Before starting a Crowd Funding business in India it is very necessary to do research and due-diligence regarding the same.

Before starting a crowdfunding business you need to consider following things:

Will my business be actual crowdfunding platform or I am going to provide services related to the crowdfunding process?

To start the business of crowdfunding you need to research and innovate the same on a continuous basis as a large number of competitors are there in the market. As today is the world of internet the businessman can reach anywhere in the world so opportunity id everywhere. The main rule of crowdfunding is “all or nothing” or “keep everything”.

Other crowdfunding businesses include providing advisory and planning service. There are also campaign management companies that will you in managing and promoting your business.

Should I build my platform from scratch or use crowdfunding software or solutions?

The number of software has already been launched which helps ease doing of crowdfunding business and processing the payment. For these types of business, you need to pay some amount of fees or some decided percentage. Building your own software will save your time and money in the long run but that shall be a time-consuming process.

Do I have enough time to do this or I need a team for this?

Doing crowdfunding is not an easy task you need a lot of research, planning, media skills, technical skills, and a long time span. You need a strong network to launch your business. At present, there are a lot of methods for promoting your business. Some may do it individually by themselves while others may need a team for doing so.

What are the legal and compliance implication of starting a crowdfunding business:

You will raise money from people all around the world and the laws in different countries vary for that for raising any money you should consult a lawyer^[1] or an accountant of that country. And if you are launching your business through the internet you should make sure that technical security is on the place.