Who Uses Crowdfunding  

Crowdfunding started about ten years ago and is quickly becoming a very popular way to finance new projects by leveraging the power of social media and viral marketing and exposure. It can be a source of capital for both small and large projects, and it has proven to work for million dollar projects providing there is a general interest in the project matched with an aggressive online promotion.

The reason that Crowdfunding is such a popular alternative these days is the flexibility that it gives the project founders. It gives the little guy a chance to bring an idea to life based on the publics view on the idea. If a large traditional lending institution turns down an idea because it doesn’t make financial sense to them, Crowdfunding gives the option to secure the funding based on the concept and idea and not necessarily the “numbers.”

The power of social media really helps to fuel the interest and overall success of Crowdfunding. The projects that seem to excel and gain the most exposure are the ones that have something very unique and different to offer. This creates the “wow” factor and results in people naturally sharing the idea/concept to their social media connections. If people start to tweet or “like” the funding proposal it can quickly spread and go viral. An original concept that catches on can quickly display just how powerful social media is. There have been projects that have exceeded their original funding amount goal by thousands of percents. This puts them in a much better position than they would have been if they just got a traditional loan for the original amount requested. It is always a benefit to have additional funds, as unexpected expenses and last minute details can push a project over budget at the last minute and if there are not any additional funds available it can spell complete disaster for the projects.

So, what are the best ways to get a project to go viral through social media? Well, there are two main things that each project needs in order to have a successful ending. The first has been mentioned earlier, and that is to have an original concept that stands out from the norm and will create a natural buzz. You should never have to ask or convince someone to share across his or her social media platforms. Something going viral happens naturally and if it seems forced the masses will pick up on that.

The other thing that needs to be put in place is a nice reward for those that donate to the cause. If the product is cool and desired then you will find that many people will donate in exchange for the item or an advanced copy. An example would be a new video game that is being produced. There could be several different donation levels, including a small amount of $5 that would give email updates concerning the release date of the game, all the way up to $100 that would include a copy of the game before it was released to the general public. These are the kind of deals that the Crowdfunding investor is looking for. It isn’t a traditional investment return, but it is a very cool and memorable reward for helping to get the project off the ground. Many people like to donate simply because they like feeling like they were a part of the products success.

So, what type of company uses Crowdfunding? Several different kinds of companies use this as a viable funding source, including corporations, non-profit organizations, inventors, authors, musicians, entrepreneurs, and small business owners. There is no limitations, any anyone with an idea that needs funding can find a Crowdfunding website to use in order to get their message out there to the masses. Some sites will only allow projects from certain industries, but a little research will turn up several different Crowdfunding options for those looking to launch a product.

The presentation of the offer is very important, as it is the first opportunity to capture the interest of potential funders. These websites have thousands of projects all seeking funding, so you need to quickly grab the attention of visitors, and one of the best ways is through a video. This allows the potential funder to watch a video to learn as much about the offer as possible. You want to make it as easy as possible for them to get the message and decide whether or not they want to help support the project. Make it simple for them! Don’t make them read through a large summary, because they are going to get bored easily and move on to another potential project. You could have the best idea in the world, but if you present it incorrectly you will not get funded. It is as simple as that, so just be smart about it and put a huge effort into the presentation.

Aside from the presentation, you also need to put a lot of thought into the rewards you offer. Crowdfunding has gained popularity because of the rewards, plan and simple! Sure people like helping and they like to support a great idea but a large percentage of donors are doing so to claim the promised reward! So, now that you know this there is no excuse to not have a great reward for those that pledge their hard earned money to support your project.

Crowdfunding involving an equity position or an implied return have come under fire recently with regulatory issues surfacing. Because of this we suggest that you use the reward angel and offer something in exchange for the donation. This will make sure that there aren’t any future issues and it will also allow the project creator to maintain 100% ownership. With the popularity of the reward model there isn’t a need to offer up an equity position in order to attract money. There is a constant flow of individuals looking at available projects on the popular Crowdfunding websites, so as long as you have a good offer it will get plenty of attention!