What is Crowdfunding?
You might be wondering- what exactly is crowdfunding? Crowdfunding is the process of connecting large groups of people over the internet, and asking them to support your idea through fundraising by making a financial contribution.
In a society that embraces the convenience of big box stores, crowdfunding and fundraising can help entrepreneurs and small businesses get off the ground. By utilizing their existing audiences and appealing to new ones, inventors can gain support, both monetarily and verbally, increasing their chances of exposure with their new business venture. But how does this all work?
In rewards-based crowdfunding, the most popular type of crowdfunding and the kind you’re probably most familiar with, backers give a small amount of money in exchange for a reward. The rewards could be anything from a hand-written thank you note to early bird access to the new product, to a trip to visit the inventors. Once the campaign is over and if the goal has been reached, the campaign organizer uses the money to fulfill the rewards and accomplish the objectives outlined in the campaign. Common objectives are raising funds for research, production, additional inventory, or marketing and promotion.
Rewards-based crowdfunding is right for you if you want to maintain complete control over your invention and business. Because you are rewarding customers with a gift rather than a piece of the company, you remain the sole owner of your idea and business. This is a popular option because it allows business owners to incentivize their donors without incurring much extra expense or selling ownership stake. Rewards-based crowdfunding also tends to work better for those offering one new product or service as opposed to conceiving an entire startup. In this model, your backers are offered nearly-instant results. If you hit your goal, you start to produce and ship their rewards. Although your backers may continue to follow your business and products, once you fulfill their rewards, your obligation to them is complete.
What can Fund an Idea do for you?
Fund an Idea is a crowdfunding and fundraising website dedicated to helping inventors at all stages of the invention process raise money and assist with the licensing, manufacturing, and marketing of fully-funded projects.
Questions to ask yourself:
Here are some questions to ask yourself when determining if crowdfunding is right for you:
How developed is your product?
The sweet spot for crowdfunding your product seems to be when your development is middle-of-the-road. It is essential to have something tangible to back up your claims – such as a working prototype, a trial-run, or other applicable example. You need to prove to your audience that your product or service fulfills its claims. However, you also need to offer a unique experience that your supporters could not get from purchasing your product at a retail store. If your product is fully developed, stocked, and ready to go on store shelves, but you just need money for marketing, crowdfunding may not be the best choice for you. Your contributors should feel like they are helping you to achieve a goal when they donate to your cause.
Are people interested in your product?
If you’re passionate about your project, chances are you have told your friends, family, coworkers, and acquaintances about your idea. Think about the times that you have introduced people to your product. What were there reactions? If many people were very enthusiastic, asked questions, and offered words of advice, they were probably at least somewhat interested in your product. It is important to leverage your audience to support your project. Talk with friends, family, and mentors about the potential of crowdfunding to determine if you have a personal audience who is excited to see your project take the next step online.
How active are you online/social media?
An active and comprehensive social media presence, both personally and for your campaign, is essential to the success of your crowdfunding campaign. Because your campaign is hosted online, a complete internet marketing strategy will greatly assist you in your endeavors. Social media is a vital part of an internet marketing strategy. Facebook, Twitter, YouTube, Instagram, and other social media accounts will allow you to reach and leverage an online audience who will be more likely to support your campaign. Participating in niche online forums specifically for your idea’s industry or crowdfunding in general can help you create an audience as well.
If you’re not a pro at social media – that’s okay. A willingness to learn is just as important as knowledge. Reach out to your audience and see if a close friend or family can help you create a reliable social/marketing strategy.
Are you passionate about your goal?
If your goal is simply to make money, crowdfunding might not be for you. Your passion has to shine through your story and campaign, and if you are only committed to a paycheck, your campaign will not be successful. Potential backers will look for a heartfelt pitch and campaign and will be excited if you are genuinely enthusiastic about your project. Everyone wants their campaign to be financially successful, but you also need to show your audience why you are passionate about what you are doing.
Can you follow through?
In rewards-based crowdfunding, if your funding goal is reached, you are bound to fulfill your backers with their chosen rewards. Not only will failing to fulfill your rewards make you look bad to your contributors, it can also have legal repercussions. Be sure you can follow through with every aspect of your campaign before making anything official.
The major appeal in any crowdfunding project is the passion and soul you put into the campaign. It is essential to charm your audience with personal anecdotes, images of the project creators, and a conversational yet professional tone to all of the campaign materials. Crowdfunding gives a voice, an audience, and an influence to people who may not otherwise have such without access to funds.