Crowdfunding: Viable Funding Option or Asking for Handouts?
When searching for funding for your business, you pursue all the traditional routes like bank loans, personal loans, and venture capital. But what if none of that works out? Or, what if it’s just not the road you want to take to start your business? There is something called crowdfunding you might want to try that involves gathering small amounts of money from many people to make up the total amount you need to get off the ground. But is this a viable funding option? Or is it just another way to ask for money online?
Crowdfunding As Legitimate Source
The method of crowdfunding has gotten so sophisticated that it’s become a completely legitimate and acceptable way to raise funds for your business. In fact, many people have more success raising money this way than through traditional venues because anybody can do it and you can set the exact amount of money you need to raise. Not a bank, not an investor. Just you.
Saving for your business can be next to impossible if you have a family and already run a tight ship. And if you’re already stretched financially, it’s unlikely that you’ll get a loan or anything like that. To combat these roadblocks, take your business straight to the Internet and pursue crowdfunding. This way, you don’t have to jump over anybody’s hurdles to get the money you need for your business. The only people you’re accountable to are those who invest in your company, no one else. That’s the beauty of these campaigns. It truly puts the power back in business owner’s hands and allows for creative and inventive projects to take off that might not have otherwise received the funding they needed.
Getting Started with Crowdfunding
While you could always just put up a PayPal donation button on your website to ask for funding, it’s much easier to use an established crowdfunding service. This way you can keep track of every single person who kicks in money, how much they donated, and establish funding levels. This means you can provide rewards for people who donate a certain amount to your project. Certainly, it fosters greater community engagement and can prove helpful in encouraging people to toss a few dollars in your direction.
If your website is WordPress-based, you can use Ignition Deck. This plug-in makes it possible to keep track of donations and funding sources all within your site. This can be extremely convenient if you require a lot of flexibility.
One of the most popular crowdfunding sites is Kickstarter. Typically used by creative professionals like writers, filmmakers, and artists, Kickstarter allows you to post up a project, the amount of money you need to accomplish it, and reward levels. Then, with some consistent promotion of the campaign, you should start receiving donations. Promotion is key, however. Otherwise, your crowdfunding attempt will fade to the background behind numerous other projects seeking money.
12 Crowdfunding Websites
Profounder: Crowdfunding for equity or revenue share
Startup Addict: Crowdfunding for startups and entrepreneurs
Believer’s Fund: Crowdfunding for New Mobile Apps
Rockethub: Crowdfunding for creative projects
Quirky: Crowdfunding for inventors
New Jelly: Crowdfunding for Artists.
CoFolio: Crowdfunding for Local Small Businesses
Start Some Good: Crowdfunding for Social Entrepreneurs
Peerbackers: Crowdfunding for Entrepreneurs
Eppela: Crowdfunding out of Italy for social projects, art & entertainment, as well as lifestyle & technology businesses
Indie Go Go: Largest and earliest (since 2008) crowdfunding website
Kick Starter: Crowdfunding for Creative Projects
(For a bit more information on each of these sites, head on over to Cash to Start – it’s where we picked up this fantastic list.)
That’s all there is to it, really. Just make sure to post regular updates about the project so people have a clear idea of how the funding process is going. It keeps those who’ve donated to you informed, and helps you keep the word out there about your campaign.