You might be familiar with crowdfunding from someone who had a GoFund me site to raise funds for a medical emergency or financial struggle. That is exactly what crowdfunding is - looking to the crowd to raise funds for something you wouldn't be able to finance on your own. Other than donation based crowdfunding, did you know that you can finance a startup business this way?
Before all of these amazing new financing options, it was extremely difficult to get financing for a new business. The issue is that lenders need to be sure they WILL get their money back. Unfortunately a great business plan just wouldn't cut it. They needed to see a history of sales as proven concept of your business. Lucky for us, there's so many creative options now! My goal is to finance my entire startup using crowdfunding. Let's briefly hit some other options.
Reward Crowdfunding basics
Depending on the platform chosen, what happens when and if you reach the goal vary. Kickstarter seems to be the most successful and well known platform. Campaigns on their site use an "all or nothing" approach, meaning the project MUST reach the goal for the business to receive funds and for the backers to be charged. Other platforms offer a "fixed" or "flexible" option. This gives you the choice of "all or nothing" or, even if you don't reach your goal, you'll receive any funds raised. At a first glance you might think, why the heck would I do a fixed campaign and possibly get nothing? Kickstarter uses this design because it creates urgency. Backers are usually not only invested in the product or discount you're giving them but YOUR progress and success. If they know you won't get anything unless you reach your goal, they might donate more than once, hoping you'll succeed.
Most platforms allow you to choose the duration of your campaign. Kickstarter doesn't recommend exceeding more than 30 days for a similar urgency reason. If a backer sees that they have 60 days to donate, they might want to come back later causing them to forget, loose interest or even change their mind. If they only have 30 days, some say, they are more likely to donate immediately, not wanting to miss out on the buzz.
Each platform is united on this topic. A video is a must for a successful campaign! I've read multiple stats on the success of campaigns with and without a video and some show that projects with a video can raise 112% more funds than projects without. I'm going to say that again 112%!! Done deal, video is a must.
As I prepare for my own campaigne you'll be along for the ride with me. Next time I'll go more in depth to run a sucessfull campaigne. I will cover the importance of getting a supportive team together, preparing and advertising before launch and following through the launch.
I'm 26 years old and have always been a goal driven person. Growing up my parents always fought about money and struggled financially in general. I told myself at a young age that I would't let that happen. I believe strongly in working hard for what you want and have made myself very proud doing so.