What You Should Know About Crowdfunding
In the past decade or so, the power of crowdfunding has grown dramatically, with millions of people funding billions of dollars worth of inventions and innovation that became available only because of the vast reach of the Internet.
Crowdfunding started as a quirky idea that had the inspiration to harness the power of billions of people on the world wide web to raise awareness and money for unique projects. The idea has now matured into a great source of fundraising potential for new technologies and inventions, as well as for companies large and small to get needed capital and to fund creative ventures. Among the many crowdfunding sites now in operation, there are specialties and areas of focus for all different types of projects and ventures. Some sites are focused on creative productions like films, books, photography and arts. Others are tech-centric, with crowdfunding projects to support new inventions, apps, and digital products of all sorts. Certain crowdfunding sites specialize in personal fundraising, whether it's for help with unexpected emergency medical bills, sponsorship of a college degree, or support for a travel adventure. These sites allow people to turn to friends and social networks to share their story and get a response that might help them succeed with their goals. Federal laws now allow businesses to seek investor crowdfunding from the general public more easily than allowed previously by securities laws. Companies can seek crowdfunding money as debt that will be repaid or as equity, which equals ownership shares.
A cancer researcher turned to a crowdfunding site that specializes in research studies to gather funds to complete a research project on Vitamin D's effects on some cancers, as one example of the vast and growing world of crowdfunding possibilities. A non-profit built a giving campaign around a crowdfunding project with a powerful and visual story combined with clear goals that helped them hit their fundraising target quickly and efficiently while connecting with their members and donors in a new way and getting positive press coverage as well. A cosmetics company ran a crowdfunding project to raise a modest, five-figure sum of money for the business, but they were more focused on creating brand awareness and bonding with customers to learn their desires more accurately and stay in close touch with them.
To operate a successful crowdfunding campaign you will need a few things:
- A product or creative venture worthy of support from friends and strangers.
- A great story about why this offering is unique, valuable, and worth their money.
- A willingness to engage in a relationship with your supporters. Whether they were friends, relatives, or strangers before the campaign, they've invested money to support you, and are your partners now. You owe a duty of trust and openness.
- A range of offerings to recognize contributions and thank donors.
- A plan of where you go from here; this is a starting point of growth, not an end.
Questions and Answers
Q: How do I know if my idea is worthy of a crowdfunding project?
A: Read about some different crowdfunding websites to see which specialize in projects similar to yours. Review carefully to figure out if your project qualifies. Research what others are doing on social networks and crowdfunding sites Look at some featured campaigns and search key terms related to your plan.
Q: How do I start my crowdfunding project?
A: First figure out all the details: what you are asking for and why, which website will host your project, what you will give to donors in return for support, how you will follow up with them, and where your plan goes from there. Spend ample time on thorough preparation and thought. Start an account on the site you've chosen and start to build your project. Get the word out through social media and press releases (with a newsworthy angle).
Q: How do people find out about my crowdfunding project?
A: Mostly, people find out about your project because you tell them, or someone you know tells them in their social network. There is no promise that you will reach millions of people with a crowdfunding project. It is mostly up to you to spread the word to people you know about your project. It has to be a project worth talking about to spread rapidly beyond your network.
Some really unique and appealing projects get featured on the website's main pages. You must really stand out to get this kind of attention, by making your project visually and emotionally appealing.