How a Social Startup Is Changing the Way We See Crowdfunding
Businesses often get funding through conventional ways such as bank loans, or capital investments from large companies in exchange for equities or shares. These are good and trusted methods which allow businesses to expand, upgrade its operations, and basically keep up with the demands of their consumers.
However, this kind of setup is painfully one-sided, with most investors choosing to support large companies because returns are more certain than others. Small players and medium enterprises are often left scrambling to find ways to keep their businesses alive. This gap in the business sector is where most crowdfunding companies come in.
More than just “finding the money,” crowdfunding groups truly get the community involved—they open low-risk opportunities for everyday individuals to invest a small portion of their income in a business or venture that they believe in and make some nice profit in return. Aside from this, they also get a chance to grow or score larger margin in the event the company they supported merges with a bigger group or expands via IPO.
This business platform has flourished, especially in the age of social media where sales pitch are no longer restricted to the four walls of a boardroom—startup businesses get to convince possible investors directly via a video shared online or ideas thrown around by crowdfunding operators like Crowdcube and Seedrs in the U.K., or Kickstarter, Indiegogo and XPO2 in the U.S., among others.
And like most digital platforms today, these crowdfunding platforms have disrupted, in a good way, the norms of most traditional businesses. In less than 20 years, who would have thought that it would be possible to have a good number of people as investors for a small enterprise, or to get an idea rolling and reach a comfortable seven-figure investment? It might have sounded crazy before, but these crowdfunding sites have proven that when you get a community involved, nothing is impossible.
Crowdfunding has definitely proven to be an effective way of getting investments not just by tapping a few moneyed individuals but reaching out to more people who could pitch in to back a project or business.
Kickstarter, for example, has already raised more than $3 billion that has backed more than 100,000 projects since last year, earning about 5 percent in commission for every successful project.
Indiegogo, on the other hand, has not only raised money for projects, but they actually give out funds for businesses that have not reached their goals but for a higher interest. And it’s not just startups that are getting support from these crowdfunding platforms. Artists, musicians and even film producers also get their share of support through sites like PledgeMusic and Seed&Spark.
Business with a heart
But not all crowdfunding projects is all about business. What’s good about these ventures is that they also get to support worthy causes that are otherwise left with no other option than a donation drive.
Barnraiser, for example, helps small farmers with their harvest by supporting them and encouraging the agriculture of organic crops, and promote a healthier way of living. This group now has over 30,000 people in their community and has funded 187 projects.
Exponential, Inc. (XPO2), on the other hand, operates on a different yet highly efficient scale. This for-profit, cause-related technology marketing group, founded by French-American entrepreneur Dom Einhorn, develops innovative concepts and strategies to support incremental fundraising revenue on behalf of NGOs, charities and associations not just in the U.S. but around the world.
Driven by the concept of net social impact, or “the amount of good that contributions can do,” they help smaller organizations by creating a crowdfunding platform where people can contribute to local causes that they believe in.
“We are a young company. Yet within our first three months of operation, we have physically provided support to 12 NGOs, fed and clothed dozens of orphans and homeless children in Vietnam and the Philippines, treated countless terminally ill seniors in hospices, and more. None of this work would have been possible were we structured as an NGO relying on consumer donations only. A 100% of this work is attributable to our innovative XPO2 platform, which makes contributions systematic and which encourages and rewards corporate participation,” said Einhorn.
The company has also pioneered the “cashless contribution” system, which gives people the chance to help the charity closest to their hearts while purchasing goods online. They can do this by installing the XPO2 browser extension created for this purpose and continuing to shop online as they would via the e-commerce websites of participating merchants, such as Target, Walgreens, JCPenney, and more. They are assured that a portion of the sales will go to a worthy cause such as a feeding program in Asia, or supporting a local animal shelter in Africa.
With a goal of raising $500,000, the company hopes to raise funds that will be used to positively impact the lives of more than a billion people over the next five years—an ambitious and impressive goal, yet not impossible, as could be seen in the various NGOs that the company has already personally visited and initially helped, such as the Morani Preserve in Kenya, the Bully Rehab Awareness Gym in Arizona, and the Truyen Tin orphanage in Ho Chi Minh, among others.
Crowdfunding may seem like an unconventional way to run a business, but one thing’s for sure: this impact investing platform is offering new opportunities that allow even small players to thrive in an environment of cutthroat competition. In a world where raising funds play a crucial role in the survivor of an organization, XPO² is at the forefront, making sure that your contributions have a transformative impact on the word we live in.