Crowdfunding is yet another online trend which has exploded in recent years. The easiest way to define crowd funding would be a project created by a person or a group asking for financial backing from those interested in the project or initiative. It is a way for those without the financial resources to raise money for a cause or product over the internet. Donations are generally accepted all over the spectrum, ranging from $1 to thousands of dollars. Call it the internet version of a fundraiser.
Some popular examples of crowd funding websites would be Kickstarter, Indiegogo, and GoFundMe, each catering to specific audiences and genres. Popular project ideas are documentaries and new technology products. Some of the campaigns posted on these websites receive lots of media attention, such as the Veronica Mars movie project, and The Pebble watch, which connects your cell phone alerts conveniently to a watch. The hype surrounding crowd funding and its increasing popularity poses the question: Can my business utilize crowdfunding?
The initial benefit to crowdfunding is obvious. You are getting funding for something which is ultimately meant to benefit you or your business! It also can act as reassurance that your ideas and inventions may appeal to a large audience, despite maybe being unconventional or complicated. However, if you product is not popular and does not reach complete funding, you are responsible for the rest of the fees, and you can often times face a fine for not reaching your goal. It is also a lot of time wasted on crafting a proposal, so confidence in your product is key. If you aren’t confident in your product, how do you expect investors to be?
Another benefit to crowdfunding is that you are increasing the exposure of your idea or product to reach potentially interested investors who you previously would not have. It raises awareness for your product or company, so even if you do not reach full funding, or something falls through and the project has to be cancelled or altered, people have still been exposed to your idea. You have a series of potentially interested customers or investors who before did not even know you existed.
Also, posting your project on the internet saves you the time and money you would have spent holding a fundraising event. All of your information about your project is posted online and is available at any time, which eliminates you actually having to be present at an event. This does, however, take away the personal aspect of a regular fundraising event. Some investors truly value face to face communication, especially if they plan to invest a lot of money.
A frequent challenge faced is getting a project accepted. Though certain crowdfunding websites accept all projects proposed, many have a grueling acceptance process. This helps them make sure the project is reputable. However, this does mean that a lot of time and effort must be put into making your project the best that it can be. There is no slack for a half completed or unorganized project. All the logistics must be in place. Another issue that can arise, in terms of logistics, is that a similar project is currently being funded or has already been funded. This means your project is no longer original and probably will not get attention or funding.
To determine which crowdfunding website would best benefit your project or idea, be sure to do adequate research. There is no point trying to raise money for a documentary on a crowdfunding site which focuses on technological developments. However, with the right idea, a crowdfunding website can really jumpstart a successful product!
Hopefully you found this blog helpful!
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Happy Thursday!
Evie
