Crowdfunding 101; All You Need To Know About Crowdfunding

By Author: Adam Laurie
Total Articles: 7
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Unless you have been living in another universe, I am sure you may have heard the term “Crowdfunding” and how it has helped countless people in making money. Even if you haven’t, there’s a fair chance that you have unknowingly come across it in some form or the other on social media. Call it a new concept or a modern take on the traditional fundraising, this method has gained much popularity and is a quickly growing market.
Crowdfunding is basically a process where people raise capital with the combined support of a large group of people, friends, families, clients or organizations, to fund their ideas, projects or ventures.
It is usually done online where social media communities and crowdfunding websites are used for putting forth business plans and product services in order to find potential donors for funding their projects. It won’t be wrong to say that crowdfunding has had a major impact on how both individuals and businesses behave with their capital.
Types of crowdfunding:
The primary types of crowdfunding are:
1. Investment (Equity) based crowdfunding
As the name suggests ...
... it involves making an Investment in a business. When an investment is made, you have to give a stake in the business to the investor in the form of shares or profits.

2. Rewards based crowdfunding
Reward based funding is where a backer supports an individual or an organization’s campaign who are pre-selling their product (usually) for discounted fee. The backer receives the reward a few months later once the product has been manufactured.
Benefits of crowdfunding:
i. Sound customer base:
If you manage to have a successful crowdfunding campaign, yes your business will get cash. But it also means it will create a loyal customer base. These customers are the investors as well so they want for the respective business to boom owing to their personal stakes involved in it.
ii. Access to funding:
You, the owner of a startup business are not subjected to taking bank loans as the only means of funding your project.
iii. Publicity
Choosing a suitable crowdfunding platform allows you to put your venture in front of masses and therefore brings lots of publicity.

Engaging potential investors:
Before entering the exciting world of crowdfunding, you need to create a powerful campaign. A successful campaign requires you to reach particular funding goals. To do so you need to engage an investor and show them what you are offering. Highlight your business idea, its value, your expertise, the strategic direction you intend to take and how you plan on launching and growing your venture into a sustainable enterprise. Also emphasize on your marketing strategy and what social media platforms you intend on using for it.

Choosing the right crowdfunding website:

Don’t rush and choose the first crowdfunding site you come across. Instead, take your time to find a suitable fundraising platform for your venture. Make a decision only after you are done considering all its pros and cons. With over 500 crowdfunding platforms, we’re listing the ones we think are worth checking out. They are amongst the top crowdfunding websites and have real communities and countless success stories under their belts.
1. Kickstarter
2. Indiegogo
3. Patreon
4. GoFundMe
5. CircleUp
Let me add that Kickstarter is a personal favorite of mine. Since its inception back in the year 2009 it has been recognized as a platform that has successfully helped fund over 150,000 projects.
It is a successful crowdfunding platform that can grab the attention of potential sponsors for your project.
And the best way to ensure a successful crowdfunding campaign is to make a Kickstarter video to express your ideas and products. It will allow the investors to connect with the personality behind the expertise shared in the business plan. There are several expert Kickstarter video production companies that make powerful videos and help you share your vision and strategy with the potential backers.
Final thoughts:
Make a business plan and align it with the requirements of crowdfunding platform that you are planning to use. Your aim is to engage the investors. Don’t forget to offer them perks that fit your startup budget.