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WittySparks / Business / Role of Technology in Raising Business Funds

Role of Technology in Raising Business Funds

Updated: January 31, 2022 by Fabiha Siddiqui • 4 min read

How Technology is Changing the Way Businesses Raise Money

Technology is playing a vital role in the 21st century, especially in the field of business where innovative entrepreneurs from various backgrounds are provided with opportunities to raise money or draw funds to initiate businesses at the micro-level.

“Technology is transformational. There is a huge opportunity to connect ourselves with the world.” – Stefan Siegel

“The main advantage is that you can expand your reach beyond your direct network and geographical region,” says Joel Keylor, co-founder, and CEO of Tresle, a platform that connects established private companies with verified buyers and capital.

“It also makes it far quicker. You can leverage a bigger audience. Fees, if applicable, are upfront and clear.”

Crowdfunding

Crowdfunding is one of the most happening things going around in the business world, which almost every entrepreneur is clinging towards. Crowdfunding is a concept where entrepreneurs raise small chunks of money from many individuals to set up a business. In short, it is a technique to bring entrepreneurs and investors together with the help of different networks. The well-acclaimed crowdsourcing websites affiliated to the business are Kickstarter, Lending Club, and Indiegogo, giving people a chance to share their ideas with the public who, if like the proposed idea, can fund via casting their vote to it.

“Instead of shopping a business plan to several different banks and financial institutions, crowdfunding platforms let an entrepreneur showcase his or her idea and provide investors of all sizes an opportunity to participate in growing the business,” – Sheila Olson for Investopedia.

However, certain crowdfunding platforms allow people to keep all the money, even if the goals are not successfully achieved. In contrast to this, other platforms do not allow people to keep the money if the targets are not accomplished. Moreover, crowdfunding is not just about filling one’s pocket with dollars.

Frontiers in Crowdfunding - Real estate business
Frontiers in Crowdfunding – Real estate business

Digital Platforms

Adopting technology and other digital platforms to raise money will bring in several benefits to entrepreneurs. For instance, it will provide them with a platform where they will have multiple choices to make, pertaining to the planning and investing money into a particular business. Not only this, there are especially designed apps, online loan calculators, and other online sources like Mint.com, iBank, MoneyDance that provide a clear picture to the entrepreneurs regarding the benefits and risks involved in the plan.

Apart from this, entrepreneurs can also find ways to make less investment or can also look for free solutions on marketing and advertisements. This can be done with the help of project management software to services like Fiverr to oDesk. This software facilitates entrepreneurs to find skilled freelancers with low investments in order to set up a business with no basic knowledge about how to handle it or from where to get their resources.

Social Networking

Presently, social media is one of the best ways to get acquainted with marketing strategies but many entrepreneurs and the startup founders are neglecting it, not realizing the fact that these platforms can be greatly used for the purpose of raising money and bringing them closer to the efficient multifarious investors.

There are many web apps and social networking sites that bring investors and entrepreneurs together as effective sources of funds but this is not the only thing that is needed. Entrepreneurs should keep themselves updated, they should have an idea about which network to choose that best fits their requirement and how to present their profiles online that will remarkably bring the attention of potential investors.

The profile of the entrepreneur plays a key role in getting attention and reaching a vast audience on social networking sites. If the profile is well presented and uploaded online then this would be enough to fetch potential publicity than any funding in the long run.

Cryptocurrency

Cryptocurrency is a digital or virtual currency generated through public networks that uses cryptography as a source of security or counterfeit that sees whether the transactions are made safely or not. It has become a legal source of transaction in recent years and currently, it is found to be the most effective way of raising funds for a business or a company. Due to its increasing popularity, many startups and entrepreneurs are looking forward to block-chain technologies for an initial coin offering (ICO) in order to raise money without compromising on their shares.

Cryptocurrency’s blockchain technology makes transactions easier without compromising the security of transactions by keeping an eye on the transfer of assets and controlling the creation of additional units. Earlier, this was done by third parties like government agencies or banks. Presently, with the help of cryptocurrency, companies can conveniently create their own ledger accounts and utilize the coins internally.

“The benefit to a company is that these coins (also referred to as tokens) are mathematically verified using the blockchain technology so you’re not reliant on the memory/record keeping of the company to the same degree you would be with an old-fashioned credit account,” says Micah Tapman, managing director of Canopy, a cannabis industry investment fund. “So, given that scenario, a company-created cryptocurrency is valuable if the company has a way for you to spend the money. Otherwise, the coin has no inherent use.”

Technology hasn’t solved all of the problems of raising capital for new business ventures or product ideas. Yet, it turns out that technology can be a great way to make new relationships and find the right backers who can help you grow your business.

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Profile picture for Fabiha Siddiqui Article by

Fabiha Siddiqui

Freelance writer at WittySparks
WittySparks Staff

A freelance writer, an Entrepreneur, Fashion & Model mentor, Events & Multimedia Specialist defines me as a whole. Apart from writing/blogging as my passion, I hold a decade of experience in the fashion & event industry. I also love playing around with all the graphic software; Photoshop & 3d max is my favorite. Work is like a drug that keeps me going, and I dearly enjoy my minor contributions to my dedicated arenas.

View all posts by Fabiha Siddiqui

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