If you think you have just discovered something innovative and it can help a lot of people finally solve a specific problem or simply provide the crowd another helpful tool they can use daily, but you are faced by the trouble of having an empty pocket or your cash in the volt just could not cover the projected realization cost, then be advised of the future of philanthropy – Crowdfunding – as it is the recommended work around for a project facing a fund scarcity problem. But before you put on your happy face for this funding solution, let’s first examine the details, how it works and where to do it.
What is Crowdfunding?
There are a couple of other terms you need to be aware of that leads to the same meaning as Crowdfunding. These terms include crowd-sourced fundraising, crowd equity, equity crowdfunding and crowd financing. If these alternative terms did not crack the nuts for you, let’s proceed to learning its basic meaning.
Crowdfunding actually takes the meaning of two separate words into one where crowd means a group of individuals or organizations while funding is cash support or financing like the other terms suggest. In this regard, it is very easy to understand that it is a type of fund that is collectively sourced from individuals or organizations who may want to take part on a project or effort that you have started or initiated but that you couldn’t push further because you lack the cash to cover what is needed. The activity is usually carried out via the internet.
Not only Crowdfunding is a solution to funding an innovative project, but it can also support a range of causes and activities, including but are not limited to political campaigns and disaster relief. We don’t want to talk about its history here as I am afraid it will take a long sheet to tell it all, but let’s jump to what you need to know about it as a founder or project initiator.
Some of the Top Benefits
- While people who choose to invest or take part may earn rewards, you get the fund you need. Most crowdfunding platforms provide a win-win solution. It allows you access to a capital you would not know existed while allowing partakers to receive tokens of their participation like tangible products or gifts.
- It is a great excuse to falling into an unwanted debt situation. You simply run the risk of losing everything you have should you solely fund your project. In Crowdfunding, this isn’t the case, though you have to deliver all your might to make the project a success to validate your portfolio as a project initiator or founder.
- A successful crowdfunding campaign can serve as a validation to the worthiness of your project. It allows it to be trusted by future major investors, which would normally inspect the project’s history before having to deal with it.
- Crowdfunding also allows access to a bunch of brains which you can utilize to make further improvements of the project you put in the line. Most platforms allow project initiators to engage the crowd by way of asking feedbacks that will surely open rooms for the project to evolve into a more solid, likeable and sellable product.
- The best of all, you control the entirety of the project in any way. This means you don’t have to necessarily give part of the ownership away in exchange for fund just to get the project started. You can even keep the revenue to yourself once the project fired up like a rocket.
How a Successful Crowdfunding is done
It all starts by having a cool project to create a campaign for. This project should come with an engaging story to tell and a concrete business plan that details where the money will be used for. It is also important that you have studied the project’s very goal to eliminate the risk of running into misappropriations which can lead to broken promises of the project – ending up with angry partakers and busted portfolio.
If you give rewards in return for money, be sure that it is something that captivates the crowd. Remember, the crowd is where the cash you need will come from. If they’re not captivated to add cash to your project’s funding, you will not reach your funding goal. Some other factors that could influence the success of the campaign are a video pitch, an effective call-to-action and marketing helpers, which can be your friends or even the capable members in your family who also have rich connections.
Then you go select the appropriate platform to run the campaign with and generate the needed cash. It pays to understand how a crowdfunding platform works to ensure that it agrees to what your project is trying to accomplish.
Where to Run a Crowdfunding Campaign
There are different crowdfunding platforms to launch and fund your project. But before you even draft your campaign speech, it is important to understand first how each of these platforms work. A brief description is provided alongside each of them, but I highly encourage you to visit and examine them for better understanding of their terms and policies.
It is one of the highly-visited crowdfunding platforms to date which takes 5% if you meet the goal alongside payment processing fees. Categories include Music, Photography, Comics, Publishing, Technology, Theatre, Art, Dance, Design, Games, Fashion, Film and Food. Their 9.9 million visits per month will surely help your project get funded in no time.
Here is a fundraising platform that is worldwide and that supports businesses, artists and non-profits. Unlike Kickstarter, and aside from payment process fees, they take 4% if the goal is met, though will take 9% if the project fails to meet the goal. Writing, Transmedia, Video, Causes, and Entrepreneurial are some of the categories allowed.
This is a fundraising platform for startups which allows them to offer equity or rewards in exchange for cash. It is subscription-based, asking $99 per month during active campaigns in addition to payment process fees.
Do you have a successful crowdfunding campaign story to tell? Share it below!