4 things you need to know if you are thinking to start crowdfunding
1. What Is Crowdfunding?
Crowdfunding is a way to raise funds for a specific cause or project by asking a large number of people to donate money, usually in small amounts, and usually during a relatively short period of time, such as a few months. Crowdfunding is done online, often with social networks, which make easy for supporters to share a cause or project cause with their social networks.
Organizations, businesses, and individuals alike can use crowdfunding for any type of project, for example: charitable cause; creative project; business startup; school tuition; or personal expenses.
There are 2 main models or types of crowdfunding:
Donation-based funding, where donors contribute to a total amount for a new project.
Investment crowdfunding, where businesses seeking capital sell ownership stakes online in the form of equity or debt.
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2. Types of Crowdfunding
Their are four main types of crowdfunding; 1. Rewards, 2. Equity, 3. Donation, and 4. Loans
Rewards Crowdfunding
This type of crowdfunding involves setting varying levels of rewards that correspond to pledge amounts. A standard rewards campaign offers at least three levels of pledges/rewards. Rewards campaigns tend to work well for client-facing, tangible products who require less than $100,000 in funding and typically last for 1-3 months.
Equity Crowdfunding
Equity crowdfunding is the exchange of actual shares in a private company for capital. In this form of crowdfunding, entrepreneurs can set investor caps, minimum pledge amounts, etc. as well as approve or deny investors who wish to view their business documents. Equity campaigns are typically several months or longer in length and fit well with startups seeking $100,000 or more in funding.
Donation Crowdfunding
Donation crowdfunding is exactly what it sounds like - the campaigns amass donations without being required to provide anything of value in return. This type of campaign serves social causes and charities best.
Donation campaigns are often 1-3 months in length and work well for amounts under $10,000.
Lending Crowdfunding
Lending based crowdfunding allows entrepreneurs to raise funds in the form of loans that they will pay back to the lenders over a pre-determined timeline with a set interest rate. Lending campaigns tend to take place over a shorter time span of around five weeks and works well for entrepreneurs who don’t want to give up equity in their startup immediately.
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3. Crowdfunding Checklist
Pre-Launch Crowdfunding Campaign Checklist
1. Design Your Product Prototype
2. Calculate Your Exact Funding Goal
3. Do Your Research on Past Crowdfunding Campaigns
4. Chalk Out Your Task Calendar
5. Set the length of your campaign
6. Use Crowdfunding Services
7. Create Your Landing Page to Capture Emails
8. Send a Monthly Newsletter with Updates
9. Set Up the Social Media Channels
10. Prepare a Social Media Campaign Chart
11. Prepare a List of Influencers
12. Prepare Your Visual Assets on Time
13. Set Up Your Reward Tiers
14. Prepare a Draft of Your Story
15. Reach Out to Media for Launch-Day Coverage
16. Plan the Fulfillment Process
18. Get Help from the Experts
During Launch Best Crowdfunding Campaign Checklist
1. Create Your Official Press Release
2. Send a Dedicated Newsletter Blast to Subscribers
3. Schedule Social Media Posts from Beforehand
4. Respond to the Comments As Soon As Possible
5. Track Your Traffic Sources
6. Send Updates As and When Required
7. Get to 30% of Your Goal As Fast As You Can
8. Set Up Special Early-Bird Perks
9. Prep a Stretch Goal Chart
10. Highlight the Press Coverage on the Crowdfunding Page
Post-Launch Best Crowdfunding Checklist
1. Be Ready With the Fulfillment Process
2. Keep Updating Your Backers of the Progress
3. Never Delay the Delivery Timeline
4. Respond to All Genuine Queries
5. Switch to InDemand Indiegogo Program for More Orders
6. Launch a Web-Shop if You Can
7. Participate on Podcasts for Media Attention
8. Thank Every Backer Individually
9. Make the Packaging Attractive
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4. Best Crowdfunding websites
Here is the list of best crowdfunding websites as per the techworld
- Kickstarter is geared towards creative endeavours, particularly projects involving ‘Art, Comics, Crafts, Dance, Design, Fashion, Film & Video, Food, Games, Journalism, Music, Photography, Publishing, Technology, and Theater’, according to the website.
- Indiegogo is more squarely targeted at entrepreneurs than Kickstarter, with the website divided into three categories: Tech and Innovation, Creative Projects and Community Projects. The site also boasts a marketplace where you can sell successfully funded products.
- Patreon is different from most other crowdfunding sites in that operates on a subscription-based model rather than a one-off bulk payment. It’s primarily aimed at finding support for typically underfunded creative producers, like writers, artists, musicians and podcasters.
- Gofundme- The most casual amongst crowdfunding sites, it adopts an informal tone for generally small-scale, personal or charity projects, rather than potential money-spinning innovations.
- Rockethub is a platform aimed at novice entrepreneurs hoping to get their business idea off the ground.
- Seedrs- Billed as an equity crowdfunding site, Seedrs is most definitely aimed at potentially lucrative business ideas. The investor network includes angel investors and venture capitalists alongside your friends and family.
- Crowdcube is a UK based crowdfunding platform aiming to provide funding for business pitches.
- Crowdfunder.co.uk aims to match entrepreneurs with a conscience with potential investors. It has raised over £50 million for projects across the UK.
- Lending Club provides loans to small businesses. You can receive personal loans of up to $40,000 and business loans between $5,000-$300,000 on which the investor will make between 5.5-7.5 percent in interest. To be eligible for a business loan you must have been in business for more than 12 months, bring in at least $50,000 annually with no recent bankruptcies.
- AngelList allows you to apply for 77,441. With one application. This site is more suited to those looking to develop their careers in startups (something to consider if your idea doesn’t pan out).