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Crowdfunding versus Crowdsourcing Crowdfunding Restaurant, Crowdfunding Cannabis and Crowdfunding Videos

Businesses can use social medical and crowdfunding sites to attract investors. Crowdfunding is when money or funds are collected from a broad group to initiate the business/venture. It makes it easy for the business to access a vast network of people to raise funds.

It's a flexible way to raise finance and has been a proven method to connect with entrepreneurs and investors. It has expanded grounds for the entrepreneurs and small businesses to present their ideas and get financing from investors beyond the traditional circle of relatives, owners, and venture capitalists. However, certain regulations are applicable on entrepreneurs raising the finance, which limits the raise process and is designed to protect both investors and entrepreneurs. Further, In the United States, crowdfunding is regulated by Security Exchange Commission –SEC.

There are tremendous advantages of raising finance by crowdfunding as there are less stringent requirements to comply for raising the finance compared to traditional modes. Further, it provides the business with an ability to gauge public opinion on products offered by them. However, grey side of the crowdfunding campaign is that if your investors do not accept your business and campaign does not reach your financing goal, any finance that has been pledged will be returned back to investors, which can damage the reputation of your business.   

Crowdfunding Restaurant

As per reports from the US Department of Agriculture, the trend to eat out is increasing in the United States. This makes more and more people enter the restaurant industry. However, the restaurant business is considered to be one of the most capital-incentive businesses in the world. Most restaurants need to build up equipment, inventory, license, working capital, attractive dine-in areas to include marketing expenses, and many other hustles for successful operations.

You might think about procuring a loan from a bank for the finance, but it may be difficult because your restaurant is just a start-up, and the bank may not be willing to accept the risk. Further, the restaurant business is considered inherently risky, and access to traditional investment platforms may be more than difficult. So, you are left with an excellent option to opt for crowdfunding, where you pitch your business idea to raise funds from many investors on the internet which is crowdfunding.

For successful crowdfunding of the restaurant industry, you need to understand the psychology of the investors. It's important to understand that the investors in crowdfunding are more concerned with the upfront details as their decision making is based on the same. So, you need to professionally present some factors of restaurant business-like service philosophy, the atmosphere of the restaurant, pricing of the different menu, and the reward structure for the investors.

Further, research has concluded that investors are more attracted to the front details with attractive pictures than the videos (for restaurant crowdfunding). In addition to this, the community orientation of the restaurant is a key factor for the success of the crowdfunding activity. Additionally, the frequency of communication with the community has proved to be one of the success factors of the overall crowdfunding process. It helps to ensure the maintenance of the project interest and the responsiveness of the investors. However, it’s important to note that there were massive impacts due to COVID-19 that impacted much of the restaurant industry. So, there is an increasing trend of the business model with the sound system of the food delivery.

Cannabis Crowdfunding

Legalization of the Cannabis in the United States (some states) has brought massive attention of entrepreneurs to this industry. It's mainly due to the fact that there are massive medicinal benefits of using Cannabis that include fast recovery in patients after the surgery. However, before proceeding with the Cannabis business, there is a need to ensure if Cannabis is allowed in the state of your business. 

Cannabis Crowdfunding seems to be an attractive industry as there is an expected increase in the market size. Further, there can be different ways you can enter the Cannabis industry that include the following.

1- Growers of the Cannabis

The growth for Cannabis can be carried in the small open grounds. However, you need to ensure that it’s legal in your state. Further, larger farmers with investment can set up their infrastructure, employ expert growers, and get a better level of production.

2- Dispensaries / retailer / delivery services

Your retail function can be some physical or online store that sells cannabis and related products. Further, there has been a trend for the development of the apps that can be used in the delivery process.

3- Online entrepreneurship

It's all about setting for the whole business model of Cannabis. Your business model can be growing and then selling or buying and selling. So, you need to take into account all the logistics and financial factors to decide on the same. Further, setting your business model also helps to set the goal for crowdfunding.

Why crowdfunding for Cannabis seems to be attractive

Up-front presentation of the business idea plays an essential role in the successful completion of the crowdfunding activity. The following factors can help you to pitch your crowdfunding campaign.

1- Increase in the international market


After the legalization of Cannabis in Canada, Luxembourg and some states of the United States, there has been a massive increase in the demand. Further, crowdfunding platforms have really added to the accumulated production of this industry.

2- Crowdfunding helps to reduce the shortfall in supply

The cannabis industry has been revolutionized with crowdfunding. It led to a massive increase in production that helped fulfil the gap in the demand and supply of Cannabis. However, the demand is still skyrocketing as we have been observing the legalization of Cannabis in different countries of the world.

Crowdfunding Video

Sometimes, your business idea may be more precisely presented with the help of video. In fact, some business ideas can only be appropriately pitched with the help of video in a much better way. Videos are effective because they use clear sight and sound in the delivery of the content with emotional connections.

As per one of the well-known crowdfunding platforms, only 33% of the campaigns are successfully completed on their platform that do not use videos in their campaigns. However, you need to ensure the following factors to make a video effective and attractive. 

What’s your business about?
How do you intend to address the needs of the users?
How your product/services makes a difference?
What’s your unique selling proposition – USP?
What’s the reward you’ve planned for the investors Why investors should provide their hard-earned funds for your business idea? 

Video enables you to present some stories that people want to listen to; in addition to some specific tone compatible products and service help to increase the campaign's overall effectiveness.

Bottom line Crowdfunding enables a business to get small funds from a larger number of people. It has proved to be an effective method of obtaining a finance and fulfilling a business dream. As the name suggests, crowdfunding is based on an idea to collect funds. On the other hand, crowd sourcing is when the business collects some information/knowledge related to their products and services. For instance, Samsung company collected information via crowdsourcing on the aspects that how they can improve features of their current products. On the other hand, there has been an increase in the trend of eating out in America. This trend has boosted the market size of the restaurant's industry, and more and more people are attracted to the same. Crowdfunding has been one of the popular ways to fund the start-up of restaurants. This is because traditional businesses find it a very risky industry.

Further, what you need for a successful crowdfunding exercise is the appropriate presentation of the up-front details. These details include how you intend to present the restaurant business-like atmosphere of your restaurant, menu, philosophy, theme, and the pricing of your menu. Further, community promotion is considered one of the success indicators for the restaurant.

In addition to this, the Cannabis industry has been another attractive destination for entrepreneurs and investors that want to earn profit and return. That’s because many people of the United States, Canada, and Luxemburg have legalized growth and sale for the same.

It's important to note that the use of videos can be one of the important factors for the successful launch of the crowdfunding campaign. It helps an investors in knowing more about your products and services. Further, an emotional connection can be easily created with the help of videos that helps to improve the rate of success for the overall campaign.

Example of crowdfunding

Suppose you have a strong business idea and need finance for your company. You just need to pitch your business idea on the website in a clear and precise manner. If investors perceive your idea is strong, they will opt for investment in your company. This fulfils your need for finance and the investment needs of the investors as they are looking for the return.

On the other hand, crowdsourcing is when the business seeks information, opinion, or work from a large group of people for their product/services. It allows companies to save time and resources while solving some technical problems. It greatly helps companies to save traditional overhead costs as work is done online that saves traditional expenses.

Example of Crowdsourcing

Samsung has realized the potential of crowdsourcing. They have designed one of the biggest crowdsourcing facilities in Palo Alto. Their crowdsourcing aims to collect innovative solutions for existing electrical products and technologies.