What is it?
Collective financing is a very simple cooperation system that allows any entrepreneur with a business idea to raise a considerable sum of money from many people to support a certain initiative.
How does it work?
It is usually published on a Crowdfunding platform. The amount necessary to carry it out is established; some platforms have a deadline to raise said money. The project is disseminated on the platform and investors vote/grant the amount of money they wish. Once the total amount of money is raised, the entrepreneur has the obligation to carry out said project.
Advantages
Financing the start-up of ideas through crowdfunding has advantages that go beyond the money raised. In the case of entrepreneurs who want to launch their businesses, the opinion of the co-financiers can be essential, which is measured in their willingness to contribute to the implementation of the idea.
If 100% of the money is raised, it can be a very clear sign of acceptance of the product or service in the market. If the requested money is not raised, it may be a sign that the idea needs to be given another try.