How Crowdfunding plan works ?
Crowdfunding plan is well known among those entrepreneurs who have brilliant idea for business but don’t have enough capital to start it. That is where they use Crowdfunding plan as a means to gather funding required for their business. Through this plan entrepreneurs can find right investors who want to invest their money and earn more as their business grows. The plus point of this plan is any small entrepreneurs can also start their own Crowdfunding plan with their own team of distributors who contributed small amount of money. Once enough funds is gathered to start the business and run it, distributors will get their share of profit as money or as services whichever company has promised to provide.
Crowdfunding plan doesn’t have any specific structure. There are different structures used by MLM companies for running Crowdfunding plan, the famous ones are binary, matrix and level structure. And the incomes they provide also varies based on the structure company decides to go with.
Types of incomes in Crowdfunding Plan
Direct Referral Bonus/ Direct Sponsor income
The purpose of introducing this income is to inspire distributors/investors to refer new investors in the system and get benefited. For example, company has decided to give 10% of the referral investors bring in the network.
Company announces additional incentive for those investors who achieve specific task (fixed or variable) set by company within fixed period of time. These incentives can be in cash or in kind decided by company.
Advantages of Crowdfunding Plan
This plan is preferable for those entrepreneurs who are looking for platform to raise capital for their business because it will help them gather good chunk of money in very short amount of time.
This plan doesn’t have any specific structure so companies can make their own plan using different structure.
Company can design it as non-working plan as well where distributors can earn commission even if they are not working.
Disadvantages of Crowdfunding Plan
According to Indian guidelines for direct selling, Crowdfunding plan is considered to be illegal plan.