Whilst crowdfunding has been a welcome addition to the sources of finance for SMEs business owners should also be aware of some of the dangers that are not always discussed.
Ask yourself one question if your closest competitor was looking at raising capital and had put their entire business plan online would you spend a small amount to get access?
Clearly by putting your entire business plan online you are potentially granting access to your intellectual property, business model, margins, structure and the identity of your senior team.
There are some platforms that are trying to deal with this by being more selective about who can access campaigns but there are no guarantees and there does not seem any option to restrict who can see a campaign.
Also if your suppliers or customers now have access to your business plan it would weaken your negotiating position as they will have inside information on your margins.
It is not all bad as crowdfunding is a great source of finance where you may have little alternative. But beware your competitors, suppliers and customers could end up using your own information against you!
Protecting your intellectual property becomes a significant challenge when you are putting your entire business plan online for the general public to access. I have been told of many instances where a business will invest in the campaign of a competitor to gain access to their financial information.