One thing that we often get asked when it comes to social lending is how to define it. For example, is crowdsourcing truly investing, or does it fall under another term? One thing that you need to realize is that crowdsourcing isn’t true investing, in the sense that the funders are getting a return. They are doing it because they believe in a project. It can be compared to donations in a way, because the person isn’t expecting to get a monetary return. It is however a great way to go if you have a business idea that really does need to see the light of day.

Let’s face it — if you have a big dream, chances are good that the banks aren’t going to let you finance it. They’re going to get in your way at every single turn. They’re going to make your life hard. They’re going to keep you freeing like you can’t do it. They’re going to make you feel like it’s the end of the world merely because you have a dream in your head that needs to come out. They’ll tell you that you’re way too risky — unless you happen to have stellar credit of course. But in this economy, there are really very few people that have perfect, blemish-less credit. Life happens and it moves in mysterious ways. There’s no need to feel like you have to go with what everyone else is doing, merely because they’re doing it. It’s all about taking care of you and your needs, rather than just sitting around like nothing has happened. You get to have the joy and freedom of really getting things done in a major way. There’s no need or reason to feel pressured to make big, sweeping changes if you don’t really want to do them. There’s no need to feel pressured like you can’t move forward. Take a deep breath, and follow these tips.

CrowdsourcingFirst and foremost, if you’re going to get into crowdfunding, it’s a separate cousin of social lending. You’re not being given a loan. Instead, you’re having to sell people on the concept of giving you their money for your dream without getting any monetary “gift” in return. There’s no way for them to recoup their investment, so in the bluntest sense, it’s really money down the drain. Not that we’re trying to tell you that your dreams aren’t worth it. But you have to look at all of this with a critical eye and know what’s absolutely important.

So crafting your proposal to the public is going to be incredibly important. It’s not just about words anymore. If you look at something like Kickstarter, you’ll find that the ones that get the most funding are the ones that get into great detail about the project. They want to sell you on the big dream and get you hooked. They want you to know that everything is going to be just fine and the project will continue as scheduled. They include video that gets you pumped and sold on what they have to offer. It’s all about selling you on potential. Don’t laugh, because you’re going to have to do it too if you really want to get those high numbers that everyone is talking about. You also have to remember that whatever crowdfunding site you choose will have a percentage based fee if you get your money. It’s something to keep in mind, but the fees really aren’t as high as people think.

So, is crowdsourcing truly investing? In a sense, but not technically. Is it still worth it for you to check it out? Absolutely! Don’t give up on those dreams!