Crowdfunding is fundraising, simply put. Crowdfunding platforms, however, are slightly different to conventional fundraising platforms. Fundraisers on crowdfunding platforms can raise funds for a variety of causes, not just charitable ones.
Kickstarter, the world’s largest fundraising platform, is a hub for creatives such as film-makers, musicians, gamers and designers all raising money for their creative project. In return for donations, fundraisers can incentivise their backers by giving away a small token of appreciation. In 2015, documentary makers @ Productions put the names of their backers into the credits of their film!
I personally think that crowdfunding is a great way to help launch your business and I’ve summarised my reasons why in these five points:
Helps to validate your idea:
Throughout your fundraising campaign, you’ll have the opportunity to receive feedback which will help you identify your audience, know how well they’ll receive your product and identify what needs to be improved before launching.
Helps you to launch quicker:
It can take years to get investment ready. With crowdfunding, you can raise the funds you need to get off the ground quicker and without the scrupulous vetting process from an Angel Investor or bank.
It’s less risky:
Raising small amounts of finance from a large number of people is much less risky than dumping your entire savings into it. Some platforms even return all the finance to your backers if your campaign isn’t successful.
It’s a promotional tool:
Like with any fundraising project, your crowdfunding campaign needs promotion. So social media, email shots, local media, networking etc. Whatever you use to help you raise funds will equally be used to promote your idea.
It creates brand advocates:
Crowdfunding helps you build relationships with people who buy into your story and believe in your product. Some companies, like Apple and Disney, have done a good job of this. They have some of the most loyal followers who are passionate about their brand. Crowdfunding enables your audience to become a part of your success story!
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