The idea of Crowdfunding is not new, it is based on an concept invented centuries ago, when investors were giving capital in exchange of shares, other goods or they were just giving money as a loan. Crowdfunding is by definition ‘the practise of funding a project or venture by raising small amounts of money from a large number of people, typically via the Internet. The idea is very simple and it most cases is beneficial for both sides, for people that offer money and for those who take money. The investments can vary from 1euro to thousands. The amount of money has to do with the project and the pool of investors or backers that the creator of the campaign has previously stated that he needs to bring his idea to life or to boost his business.
In some cases, project owners in order attract supporters (or potential investors), offer special rewards. For instance, the first 10 that will invest in the idea, they will be rewarded with special gifts, offers or products.
Nowadays, online platforms enable crowdfunding by securing all the procedures to be legal. Kickstarter is the most famous online platform for crowdfunding. Also, active platforms on crowdfunding are Indiegogo, Fundly, Applist(for apps), GoGetFunding, Peerbackers etc. The above platforms cover a wide range of products and services. But, there are also platforms specially designed for certain products or services such as, Agfunder for agriculture, Circleup for commercial products only or Kiva that uses crowdfunfing, only as a loan, in order to support less developed countries.
Secrets for a successful crowdfunding campaign:
1. Before you launch your campaign update all your social pages on you idea or venture and what you are planning to do. Ask your friends, partners, family to support you by sharing the information, like your content and comment on your posts. Your presence in social media is important as the majority backers are going to reach you through your pages on LinkedIn, Facebook, Instagram and other online networks. Build your campaign by constantly uploading your news, goals, purposes and ask from people to support you. Furthermore, through social media, you can create networks with blogs, groups (for startups and crowdfunding) and journalists. Journalists and blogs will introduce your work to people that might be interested in what you are doing and they will give you extra publicity.
2. Create a video that will explain who you are, what is your idea about, your beliefs and why is your project worth the support. Use pictures, diagrams, examples and descriptions for making your video as attractive to people as it gets. Introduce your team and talk about your achievements so far. Lastly, offer some rewards to the fist people that will support you.
3. Make a research on the web and choose the most appropriate platform for your project. Read carefully terms and conditions for the services that platforms provide to users. Some platforms let the team that run a campaign to keep as much money as they have gathered until the last day, even though the amount of money is not the one that they had proposed in the beginning. Other platforms like MicroVentures and Seedinvest are only for investors.
4. Be in touch with your backers. Platforms provide you with tools to do that. Use all the available services to support your project. Upload pictures, articles and anything that will help you attract more people.
Things you need to consider before you launch your campaign:
- Before you launch your campaign, be sure that your idea is well structured. This means that you have a business plan that guides your moves and defines your goals. If you don’t, you run the risk to mislead your project and disappoint your ‘crowd’.
- Think carefully about the amount that you need before you apply to a crowdfunding platform. Make a list of all your expenses. Remember to calculate taxes and the fees that the platform requires. This information should always be on Terms and Conditions. Read everything carefully and do not hesitate to ask for more information wherever you feel that something is not clear to you.
- If you launch a rewarding model be sure that you are going to send the rewards to your backers on the day that you had previously set.
Extra Tip: Each campaign should contain a powerful reason behind the idea, exciting and unique rewards and an eye-catching display.
Lastly, a huge misconception is that crowdfunding is only useful for small businesses and startups. But this is not true. Crowdfunding provides a funding opportunity even for well established companies.