Have you had success with a crowdfunding campaign?
Hello all. You'd be surprised, but not everyone has heard of crowdfunding yet. Mainly those people that don't use the Internet much. I was talking to one of my friends the other day about crowdfunding because he was saying he had this cool idea and I was saying that he could start a crowdfunding campaign and get donations to it. At first he didn't understand what I was talking about as he'd never heard of crowdfunding before so I had to explain the concept to him and how it all works. I know the circles I keep right!?
What is crowdfunding?
I was explaining that basically the way it works is that you present your idea that you have, whether it's an idea for some new service like a mobile dog washing service or mobile ear cleaning service or some new high tech gadget or invention whatever. Then people can "back" you and donate money to your idea. Then when you've reached the required amount needed to do whatever you need to do to get that idea off the ground and into a running business you can. And you can offer rewards and incentives to those that back you such as a share in the business or tax benefits if you're a registered registered NGO (non-governmental organization). Although people that donate for good causes like someone needing clothes don't generally expect to get their money back. They just donate to you because they think it's a good cause!
What types of crowdfunding is there?
There are basically 3 different types of crowdfunding. There's donation crowdfunding, where people can donate to you because they like the cause and you can offer them some incentives in return like free ticks to the events you'll be holding or free albums and tracks you release and other gifts and stuff. You don't have to give the money back and generally, all the donations you get are considered to be intangible and yours to keep and put towards what you need it for. Donation crowdfunding is more ideally suited for someone that need to raise some money for something they need to improve their life with in some way. It could be something like you need the money to buy a new car or a new washing machine. Or you want to hire a studio out so you can make songs. If they like your cause and they like your sample songs, and they want to spend their money on something they can back you on it!
Then there's debt crowdfunding where the donators or for want of a better word "investors" get their money back with interest on top. This is sometimes called peer-2-peer or lend-2-save and it lets people basically lend money and bypass the banks. The returns you get as a debt crowdfunding investor are always financial. Although you will be able to say you contributed to the success of someone's idea for some innovate product or business. Sometimes known as "micro-finance", this is good for people in poor countries where no interest is paid on the money loaned but the one who lends it is rewarded in a social way such as being invited to events as well as what you will receive back financially. You will have to have a solid idea and put together concepts and know about how the business will work to get people to back you though.
Then there's equity crowdfunding where people invest their money in exchange to receive equity which could be a certain percentage share in that business for the life of that business. To a slice of the earnings every month or year. This can be much more profitable than debt crowdfunding but also carries more risk as well. If the idea is successful then the value of it will increase. That's just the law of supply and demand. But if that idea flops, the interest in it will flop along with the value of it and you could loose out on every cent you invested in that idea. That's why you should do a lot of research into something that is equity based to ensure it doesn't flop later down the line! You just have to convince people that it wont and will be a success.
So that's the basic 3 types of crowdfunding.
Have you ever done any of these types of crowdfunding yourself?
Did you have any success from it? Did you meet your goal?
Or are you still waiting?
Or have you ever even backed someone's crowdfunding campaign?
Do you have any ideas you think the crowd could help you with?
Have you ever thought of making a crowdfunding campaign but didn't know how?
Would you pay for someone to make a crowdfunding campaign for you?