The basics of launching a successful crowdfunding campaign& How to raise campaign
·
Crowdfunding
The most difficult part of any entrepreneur life
is to arrange fund to support it’s venture. There are many methods to arrange
funds one among that is crowd funding. In crowd funding, you choose a platform
where you showcase your idea and people using that platform come to know about
that and if they found your idea revolutionary or interesting they support your
idea by donating some amount in return of some benefits which they will get if
your idea succeeds.
Basically there are four types of Crowdfunding:-
·
Debt Based Crowd Funding – In this method people contribute in your
idea in return of some interest they will get on the money they have invested.
For example if you want to start a shoe making business but you don’t have
enough capitals to begin with. So you go to crowd funding platform and raise
the capital. Once you start your business you need to pay some interest on the
capital which you raised through the platform. Some platform to raise money by
debt based crowd funding are Funded Here and Moolah Sense.
·
Equity Based Crowd Funding – In this method people’s contribute in
your idea in return of some percentage of profit that you will make if your
business succeeds and grow over time. Forexample you have idea of e-commerce
platform and you don’t have capital. So you arrange the capital with the help
of crowd funding platform. Now as your e-commerce website grows and they reach
a certain valuation over time. So your initial investors will have some
percentage of your valuation in terms of equity or shares. Some platform to
raise money by equity based crowd funding are Angel List and Fundnel.
·
Reward Based Crowd Funding – In this method people’s contribute in your
idea in return of some reward that they will get if your idea succeeds . For
example if there is an independent film maker and he wants to make a film but
don’t have enough funds to support his venture. He goes to a crowd funding
platform and a raise capital. So all the people who invested initially will get
the first copy of the film prior to release. Some platform to raise money by
reward based crowd funding are kick-starter and Indiegogo.
· Donations Based Crowd Funding –In this method people donate money for some cause without expecting anything in return. For example if a certain place is hit by hurricane and many people have lost their living so people donate some amount of money without expecting anything in return for their welfare. People also donate money for medical expenses in this form. Some platform to raise money by Donations based crowd funding are You Caring and Friend Fund.
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Process to raise funds via crowdfunding campaign :-
·
The first step of any business is idea. Once you have idea what’s your
business or service is going to be you need capital to start with it. Before
starting any business you need to find your customer base or target audience and
once you are done with all this you need to work on your business revenue
model.
·
Now as you are done with your business model you need to choose which
platform you are going to use to raise the fund and which type of crowd funding
you are going to use.
·
Now as you have registered yourself on the platform you need to
promote your campaign for better reach.
So plan your marketing strategy accordingly and be available to investor
during your active campaign time.
So once all this is done and your target amount
is raised through the platform now it’s time to work on your idea so that you
can provide return to your investors.
Some successful campaigns are as follows :-
·
The most successful crowd funded project in USA is Pebble Time. It
raises around 20 millions US dollars to support it’s venture to manufacture
smart watch. Almost 80,000 people backed this idea and after it’s success
Pebble Time launched it’s various version. They sold their business to Fitbit.
·
The most successful crowd funded project in UK is Dark Soul. It is
basically a board game and it raised around 3.77 millions British pounds. This
game was released in 2017.
Some of the advantage of crowd funding are as
follows :-
·
When you register yourself on a crowd funding platform the target
audience is entire world so it helps you get feedback of your business or
service and also help you decide what’s your target audience prior to launch of
your product which will help you design your products marketing campaign before
actual launch.
·
It is also a faster way to raise funds because going after venture
capitalist and pitching the idea consumes time.
·
As people who will invest in your venture will be a part of your team
because directly or indirectly they will help you to promote your business.
·
If your idea is out of the box then it will draw more attention and
which will make your products or services an instant hit.
Some of the disadvantage of crowd funding are as
follows :-
·
The biggest draw back of crowd funding platforms is that once you
start your campaign your idea is visible to the world and people may try to
copy so it’s important to take patent or copyright before registering yourself
for the campaign.
·
The target amount which you have set to raise through the platform is
not reached then the entire amount is returned back to the investors.
·
If you couldn’t raise the desired amount then all your efforts which
you have done in managing your campaign will go in vain.
·
The biggest hurdles is maintaining the relationship with the investors
and keeping up-to their demands once you begin with your venture.
Overall we can conclude that crowd funding had helped people to raise funds earlier also and it will also help to raise money in future. It is expected that around 96 Billions dollar will be raised through this method globally till 2025.
Related searches- How do I increase
my crowdfunding campaign?
What are the different types of crowdfunding?
What is crowdfunding and how it works?
What do you think makes a crowdfunding campaign successful?
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