Crowdfunding is the collective effort of individuals to pool financial support for the efforts initiated by other people and organizations via the Internet. It has proven to be a great asset in sourcing potential customers and increasing an audience, offering a better chance at success. In 2012, the crowdfunding market was $2,806 million, and has since experienced a double digit growth over the previous three years (source: MarketingCharts.com).
There are three types of crowdfunding platforms:
rewards and philanthropy
Investors receive a stake in the company.
Investors are repaid for their investment over a period of time.
Investors receive a tangible item or service in return for their funds.
How does it work?
- Create an online profile that contains relevant information about your project
- Set a goal of money and fixed number of days for your campaign
- Utilize social media and online networks to ensure goal is reached
Why choose crowdfunding?
- Presents a low cost approach to raising initial funds
- Provides a testing ground for the marketability of your startup
- Gives access to potential financial backers around the world
By creating a compelling story that draws readers, people are inclined to support ideas for the following reasons:
- They connect to the greater purpose of the campaign
- They connect to a tangible aspect of the campaign like the rewards
- They connect to the creative display of the campaign’s presentation (source: forbes.com)
- Can be fast, low cost way to access some initial funding
- Offers a credible platform to promote a venture without a dedicated website
- Serves to test the strength of your appeal and execution of your plan
- Requires strong online engagement (versus face-to-face investor meetings) Limited to small investment rounds
- Fees may be deducted from any revenues or profits earned
- Potentially requires “perks” for investors that require time and attention to coordinate
Crowdfunding for Nonprofits (SSIR)
“The Future of Crowdfunding”: A Technica.ly podcast on how to successfully raise money and attention from the crowd
“What is CrowdFunding? Why, when and how to crowdfund:” A YouTube video on the process of campaigning
Resources from Indiegogo:
- Expert Tips for Running a Successful Crowdfunding Campaign, with Prep Calendar and Checklist
- Soft Launch for a Smart Campaign Launch
- Social Innovation resources, including contact information for Indiegogo’s in-house social innovation crowdfunding experts
- Crowdfunding Field Guide