Crowdfunding has become a major source of raising capital for startups and other small to medium organizations in the last few years. Websites like Indigogo and Kickstarter have a significant user base that rely on collecting funds for their projects.
Before the concept of crowdfunding came into existence, people and organizations would turn towards banks and other capital venture firms for securing funds for their projects. This was (and still is) a tedious work that required a lot of meetings and convincing. The project had to have a detailed and complete budgeting, feasibility analysis, profitability index and return on investment calculated. Then only would the investors do their own evaluation of the project, calculating their own profits into the equations.
Large financial institutions, small and medium level entrepreneurs were mostly ignored by them, citing that the effort and the output was not justified since there were other higher gain projects to choose from.
With crowdfunding, the scenario has changed. The ability to connect to a large number of small investors and pooling all the little bits into one huge capital has enabled micro level entrepreneurs to see their visions and goals come to life. The industry has certainly grown. In 2015, USD 34 billion were raised through different crowdfunding organizations.
Crowdfunding And The Drawbacks.
Crowdfunding has had a lot of help through the internet. Websites like Indigogo and Kickstarter have enabled people from all around the world to connect, lend or borrow money for startups. Yet, there are a few issues that have risen from this:
- Commissions: Websites, acting as intermediaries, earn from connecting fundraisers and investors. A significant portion of the funds raised is claimed as a commission. This means lesser amount goes to the startup in question.
- Project Feasibility: True to the traditional funding by banks and other financial institutions, a scrutiny of a proposed project is done to see if it is feasible or not. A higher feasible project means more earnings through commissions for the website.
- Hold on Cash: Since the platform acts as an intermediary, it has total control over the cash and the amount to be released to the startup, creating hiccups in the cash flow that the project cannot afford.
- Limited Approvals: Since platform users are from different geographical locations, the websites often have strict rules on what kind of projects will be accepted, limiting people with a good idea on how to raise funds.
- Slow Transactions: Cross-border users mean that funds from all over the world are collected and then released to the startup, which might not be in the country of the platform. Traditional banking means that funds transfer also take a significant time.
Elix: Crowdfunding On Blockchain
With Elix, decentralized platform for crowdfunding, issues faced by modern crowdfunding platforms are countered. The platform takes the power of blockchain and applies it to raising funds, enabling users (either lenders or borrowers) an easy and effective way of generating capital for projects. With the platform, users get:
- Zero Commissions: As a peer-to-peer system, the platform is not involved in the borrowing or lending of money. There is just a nominal charge for noting down the transaction on the decentralized ledger.
- No Holds Barred: As long as the project proposed is not illegal, anyone can set up a funding request. The project feasibility is evaluated by the users themselves.
- Flexible Terms and Conditions: Lenders and startups set up their own conditions for injecting cash into a project. If a lender finds a project that has suitable terms, he or she can fund it. Vice versa, a lender can also set his or her terms for loaning money and a project team can request for the funds.
- Instant Pay Outs: With smart contracts defining terms of fund release, at each milestone, the money is automatically released to the project without human interference. Furthermore, since the platform is based on blockchain, slow banking procedures are bypassed an in just a few minutes, the money can be sent to the project team, regardless of where it is physically situated.
Based on the Ethereum platform, Elix has its own native token that acts as a means of value and transaction. The Elixir Token, unlike most others with a launch in progress, are already being traded on different exchanges, such as KuCoin, CoinExchange and EtherDelta.
To lend or borrow on the platform, access to Elixir tokens is a must. There are currently nearly 32 million tokens in supply, with an average price of 0.00003242 BTC to 1 Elixir. The platform is looking into the legal aspects of integration of fiat currencies, enabling quick cash out of tokens for ease to startups. Similarly, lenders would also benefit from instant conversion of their fiat into the tokens to lend.
With a system that gives speed, cuts heavy commissions and offers what other platforms do not, the Elix platform is geared to become a major crowdfunding source in the coming future.
Find out more on: https://www.elixirtoken.io/