Crowdfunding: everything you need to know
You have an idea for a book, movie, product, or game, but there’s only one problem. Where’s the startup capital going to come from? Crowdfunding has become a viable way to get started. In fact, it’s what most people turn to when they’re not interested in going to a bank or traditional investor. However, there’s more to it than simply posting a few lines on Kickstarter, a lot more.
What is crowdfunding?
Crowdfunding serves as a way for entrepreneurs, small business owners and creative professionals to acquire capital by asking a collective group of people to contribute money. You generally state a monetary goal, and once you reach it, the funds are released to you so you can start working on the project. Crowdfunding has been used to fund a wide range for-profit entrepreneurial ventures such as artistic and creative projects, but also medical expenses, travel, or community-oriented social entrepreneurship projects
A crowdfunding campaign doesn’t take the money without giving something in return to the contributors. Instead, those people can choose from rewards which must be delivered by the person running the crowdfunding campaign. For example, if someone backs a movie idea they might have reward options like a credit, a role, a copy of the DVD, or an option to meet the cast and crew. Some crowdfunding campaigns are equity based, which means investors aren’t contributing money for a reward, but instead, for a piece of the company.
After reaching your crowdfunding goal, it’s expected that you go to work and complete the project. Keep in mind, however, that many crowdfunding campaigns fail to do this.
Crowdfunding success stories
Although the chances of becoming a crowdfunding runaway success story are slim, it’s interesting to take a look at the aspects that made some of these so successful. This way, you have a chance to explore what they did right and wrong. For instance, almost all great crowdfunding campaigns have a video as the main pitch. You’ll also find fun and creative rewards, beautiful imagery, constant communications with backers, and a full outline of the plan to complete the project.
Here are some of our favorite crowdfunding success stories:
- The Broken Lizard comedy group raised over $2 million in around 26 hours for the second Super Trooper movie. They eventually reached around $4.5 million.
