Blockchain technology is gaining momentum, providing fresh and exciting new possibilities for people all over the world. It can be applied to multitudes of industries and verticals, and is versatile in use. One of the sectors that could benefit the most from blockchain technology is arguably crowdfunding and fundraising, especially when it involves startups, which was already gaining speed before the advent of blockchain.
As a viable and much more affordable alternative to venture capital funding, crowdfunding has evolved steadily in the past few years. As a result, non-traditional projects could target a new audience to pitch to and raise funds for their cause. With the integration of blockchain, crowdfunding could certainly be pushed to greater heights, to unlock new use cases and enable global outreach at a scale never before seen.
Firstly, however, we need to understand the drawbacks of traditional crowdfunding.
Not all existing traditional crowdfunding platforms embrace projects or services that do not offer an actual physical and tangible product. This means that software-only goods, for example, are at a disadvantage as these platforms are unable to properly facilitate the fundraising of related projects. It cripples the innovation mentality and narrows the scope of new products and services that can be offered and accepted by customers.
Besides, in some cases, investors find out that the project they have just put money into is a scam only after sinking their funds in. Some lucky investors may get their money back, but in most cases, even these well-known crowdfunding platforms cannot guarantee its investors full refund, and may not even be responsible for the loss of funds. At the same time many high-quality projects do not have access to targeted pools of sophisticated investors, simply because their products do not match the provisions set by traditional crowdfunding platforms.
These are just some of the limitations of traditional crowdfunding platforms that we have studied, but these points are perhaps the most crucial for crowdfunding projects, or potential supporters of said projects.
After blockchain was born, how has it changed the crowdfunding landscape?
- Decentralization: A core feature of blockchain networks, decentralization ensures that no single entity has overwhelming authority over any product executed on the network. This technology was highlighted repeatedly during the peak of the Initial Coin Offering (ICO) boom. Compared to how crowdfunding sites work today, this is a major step forward, because by implementing decentralized processes, the asset will be owned by a third party at every point of the operation. A smart contract serving as an escrow will conduct the transfer of any tokens available on the network and ensure the smooth and automated execution of the transaction, with a great reduction in time and costs.
- Tokenization: Blockchain may depend on asset tokenization to provide equity to investors or any similar concept of ownership, and applied in the crowdfunding process, will allow pre-orders of potential intangible goods. This can potentially open up a whole new world of possibilities for investment. Potential supporters or investors of projects are not only investing in the proposed product, but can end up buying into a small, partial stake of the project.
- Higher fundraising success rate: Low fundraising rates can be largely attributed to a lack of trust in the project by investors, as the crowdfunding space is home to a high number of fraudulent schemes. What if we could eliminate doubt from this process? Integration of blockchain technology and smart contracts into crowdfunding platforms can allow for the setting up for milestone release of funds, for example, where projects will only obtain a percentage of invested funds after they fulfil certain known requirements. Investors will not have to worry about losing their funds in this case, thereby fostering greater trust between projects, investors and the platform itself.
A new era in crowdfunding is on the horizon. Blockchain technology is facilitating the democratization of capital for startup companies. With the application of blockchain to crowdfunding, startups are gradually approaching investors and funding sources more easily. In return, investors also have many new ways to obtain funds. With this revolution, in the next few years, it would be interesting to see just how the landscape of crowdfunding will change.
How Can Concordia Ventures Help?
Concordia Ventures is a leading pioneer in cryptocurrency-based crowdfunding, where the integration of crypto payment options is provided to you in our one-stop platform. At Concordia, we can increase the odds of a successful crowdfunding campaign for you with the help of cryptocurrency. This is due to our in-app digital wallet feature, which allows users to support campaigns on our platform directly with the virtual assets stored and managed in each user’s account. With the ease of crypto payments, users who prefer crypto are certainly encouraged to participate in the crowdfunding of projects available on Concordia’s platform.
On the other hand, project owners and merchants can look forward to onboarding a new base of customers who happen to be crypto enthusiasts. Empowering both customers and merchants in the process of crowdfunding is at the heart of Concordia’s manifesto.
At Concordia, we believe that your success is our success.
About Concordia Ventures
If you are interested in listing your project or finding out more about our platform, drop us an email at firstname.lastname@example.org. We are only accepting technology-related projects at this point in time for our launch campaign. We will be launching our desktop and mobile versions for iOS and Android soon. Subscribe to our newsletter to stay updated with our launch date!