You have probably heard of venture capital firms and angel investors, and you are well aware that banks are an option for funding. But did you know that there is another option available to small businesses and non-profits for obtaining cash flow? It is called crowdfunding.
Wikipedia defines crowdfunding as:
A collective effort of individuals who network and pool their money, usually via the Internet, to support efforts initiated by other people or organizations.
Simply put, crowdfunding allows people to donate cash to your cause if they believe in you and your idea.
Why Use Crowdfunding?
By using crowdfunding, you can grow stakeholders who are interested in your product, service or mission while obtaining cash resources to invest in your start-up, expansion or new idea. By collecting small contributions from many, you have the opportunity to source significant funds while increasing awareness and boosting your reputation.
How Crowdfunding Works
No matter what you want to raise money for, you can start now. The key here is to invite others to experience your passion. Successful crowdfunding isn’t about asking people for money but rather building a community around your idea and letting them take part in the unique opportunity.
There are many websites that provide you a platform for your crowdfunding.Â Two types of crowdfunding platforms – rewards-based and donation-based – are the easiest for companies and non-profits to manage. Rewards-based projects offer an item or service in exchange for a monetary offering. Donation-based projects offer donors recognition, appreciation or an item of value.
Once you decide what kind of project you want to offer, you can select the platform that will best help you achieve your goal. Here are just a few:
- Indiegogo is an equal opportunity platform dedicated to democratizing the way people raise funds for any project â€“ creative, entrepreneurial or cause-related.Â Its flexible funding option allows you to keep whatever money you raise, minus the platform fees.
- Kickstarter accepts creative projects in several industries including:Â Art, Comics, Dance, Design, Fashion, Film, Food, Games, Music, Photography, Publishing, Technology, and Theater. At Kickstarter you have to define your pledge goal and meet it, or none of the money is collected.
- Fundly.com connects those who need to raise funds for â€œpassionateâ€ campaigns to donors.
Once you have selected the vendor you want to work with, start building your project or campaign. Preparation is keyâ€¦..identify people who you think would be interested and those who know a lot of people who can share your passion. Start building your community and share your enthusiasm to get others motivated. When it comes to crowdfunding, it’s not all about how much money each contributor gives, but rather how many contributors you can get. So start building that network.