In this article, we’ll explain the ins and outs of crowdfunding and what you need to know before you set up your first campaign. There are various types of crowdfunding and each type has particular methods that work better for that area of crowdfunding. However all types of crowdfunding generally follow a similar core process, which we will outline for you, so you can implement and kickstart your campaign successfully.
What is crowdfunding?
Crowdfunding is raising a set amount of funding for a particular project. The funding is made up of small amounts of money from the ‘crowd’ – a large group of people, who share an interest in your project.
What types of crowdfunding are there?
Rewards – generally ‘pre-selling’ an innovative product or creative project.
Equity – raising investment in return for equity in your business.
Donation – raising funding for charity and social causes through donations.
Where does crowdfunding take place?
Most crowdfunding projects take place on the internet and are launched on a specific crowdfunding platform, which specialises in your chosen area of crowdfunding.
For example, if you are launching a campaign to pre-sell your innovative E-bike invention you would choose Kickstarter or Indiegogo, who are the leading platforms for ‘Rewards’ campaigns.
If you wanted to raise investment for your E-bike company you would launch your campaign on an equity crowdfunding platform like Crowdcube or Seedrs.
And if you wanted to raise money for your new charity idea then you would use a platform dedicated to donation campaigns like Crowdfunder or Go Fund Me.
There are many other platforms out there to choose from but they are smaller and less reputable compared to the big platforms. This may have an effect on people being willing to support you.
It’s important to consider where your audience will come from. If you want a global audience then pick a global platform or if you want a local audience to choose a platform based in your country.
Who can crowdfund?
There are no restrictions on who can launch a crowdfunding campaign. As long as you can access a crowdfunding platform and social media platforms for marketing the campaign then you are well placed to launch a campaign.
That being said campaigns that have a team behind the project generally outperform projects with a single founder. The reason is simple, a team can spread the workload and access a bigger network of contacts, which increases awareness and momentum for the campaign.
I’m not going to pull the wool over your eyes, crowdfunding involves a lot of work and will take up many hours and many days to bring your project to life. Having a team that can work together on your project, implementing their diverse set of skills, will make things a lot easier for you and set your campaign on the road to success.
When should you launch a crowdfunding campaign?
Launching a successful campaign takes time to implement and build momentum. The most successful campaigns spend many months perfecting their project, messaging and building buzz around their campaign.
At a minimum, you will need 3 months to get everything in order and launch your campaign. So if you plan to launch sooner, then stop and think clearly about what you need to do. The worst thing you can do is launch your campaign too soon and see it fail, just because you weren’t ready.
Before setting a launch date ask yourself these key questions.
- Do you have the time required to make the project work?
- Do you have a crowd to help fund 50% of your target on launch?
- Does your audience actually need or care about your idea?
- Does it make financial sense to crowdfund your idea?
Unless you can answer yes to all of these questions it’s best to postpone your campaign until you can.
Why should you crowdfund?
Many people think ‘money’ when crowdfunding, but crowdfunding provides you with so much more than just raising the money. The best and most useful benefit gained from crowdfunding is building a community of followers and fans. For a start-up or cause building a crowd provides huge benefits.
A community can help to shape your offer and develop your product by sharing their ideas and feedback. The community are likely to feel connected to your project and support you long term, as they now have a vested interest in your success.
Here are some of the main benefits of crowdfunding:
- Build a community
- Validate your idea
- Create brand awareness
- Increase your social media following
- Attract customers
- Raise funding and Investment
Crowdfunding can be transformational and really propel your business or cause to the next level. So don’t be deterred by the hard work that is required to launch a campaign. Embrace the challenge and go out and make your big idea a success. Remember a crowdfunding video is an integral part of your campaign, so be sure to enlist the help of an agency like Wow Your Crowd, who can support you with all areas of your campaign guide you on your crowdfunding journey.
