Crowdfunding. What it is and how to apply it in business

As of today, when startups and small businesses are looking for new ways to finance their operations, an innovative method is entering the arena—crowdfunding factoring. This is a powerful tool that allows businesses to raise funds for development without the need to take out large loans with high interest rates.

Published 2 min read

Ayaulym Ayaganova, city — Astana, financier, co-founder and CEO of Acvee Finance, board member of TechnoWomen, head of the technical women's entrepreneurship group, @ayaganova_ayaulym

What is Crowdfactoring

Crowdfactoring combines two key concepts:

Factoring is the financing of goods turnover or services under the assignment of rights to claim. In simpler terms, this is when your buyer takes goods or services with deferred payment. In this case, you receive money immediately by assigning the rights to receive funds to a factoring company.

Crowdfunding is the raising of funds from a large number of people through online platforms.

The combination of these two approaches constitutes crowdfactoring, where many investors contribute small amounts to finance a company's goods turnover. This allows businesses to quickly and efficiently obtain funds for further growth and development.

Advantages of Crowdfactoring

1. Quick access to funds. Instead of waiting a long time for payment from debtors, you can receive money immediately.

2. Reduction of cash flow gaps. This helps businesses avoid temporary shortages of cash for purchases and other operations.

3. Flexibility. Funds are used only for specific transactions, without increasing the company's overall debt.

4. Avoidance of large loans. Crowdfactoring allows businesses to do without large loans at high interest rates, avoiding debt burdens.

Application of Crowdfactoring in Business

Let's consider how crowdfactoring can be useful in practice. Suppose your company supplies goods to large corporations with deferred payment, but you need to immediately purchase goods for other clients. In this case, crowdfactoring can solve the problem: you transfer the rights to claim payment for goods to a factoring company, which pays you the transaction amount. Thus, you quickly receive funds and continue to develop your business without delays.

Conclusion

Modern business conditions require innovative approaches to financing. Crowdfactoring represents an effective solution for companies that want to grow without the risk of significant debt obligations. By attracting funds from many investors, you gain access to the capital needed for growth and expansion. Kazakhstani companies, such as Acvee Finance, have already demonstrated the success of this approach, turning crowdfactoring into an accessible and beneficial tool for business.

Use crowdfactoring to optimize financial flows, avoid cash flow gaps, and run a successful and sustainable business.