by John Hawthorne
Imagine you have an idea and need some funding. You go to a bank. Right? You might have a conversation like this:
“Hey, Bank Loan Officer, I’ve got a fantastic idea, but need cash to get it off the ground.”
“Fine. I’ll need your date of birth, date of birth of your dog, blood samples from you, your mom, your dad, your neighbor and your neighbor’s neighbor. Then also the name of your future grandchild, the make and model of your first car and the birthplace of your grade school teacher.”
“Yeah, just kidding. Still no.”
Of course it doesn’t. The reliance on bank loans to help get a small, fledgling idea off the ground is a thing of the past.
So what does an entrepreneur do these days instead of begging on bending knee at the glass and marble relics of the past? You turn to a very public, very social, very now way of raising capital.
Socially Raising Money in a Very Social World
What is crowdfunding?
Simply put, it is requesting and receiving money online from strangers in the hopes of funding a particular project, charity or business.
Easy enough, right? Well…
Crowdfunding has been around for a while, as early as 2003 on the internet. During much of its infancy, musicians or filmmakers were the main forces behind the phenomena. Producing content for fans, paid for by fans.
Recent years though have shown it to be a truly viable source for funding creative and business projects alike.
Past campaigns have raised millions of dollars for everything from a smartwatch to video and board games to a cooler to a Veronica Mars movie. That’s an eclectic list.
There are hundreds of thousands of people looking to be part of a new or updated idea. Whether just wanting a perk from the creative process to actually owning a piece of the pie, no idea is too big or too small for a willing online community with a want to be part of something fresh and exciting.
And that’s where you and your fantastic idea come in. Before we get to that most satisfying of places in the creative process – the finish line – there are a few basic tenets to understand to ensure a successful crowdfunded campaign.
Know Your Project
Sounds simple enough? Maybe even a bit trite?
Perhaps, but it is key to crowdfunding success.
Knowing what you want and what you want to achieve in this process drives everything forward. Yes, there may be components along the way more directly tied to the success of a funding campaign, but your idea sets it all in motion.
So you really need to know it, inside and out. Specifically, knowing your goals and what your endgame may be. To get from there to here a series of questions to ask and answer yourself will help coalesce your approach heading into a crowdfunding project.
First, is my funding goal realistic? How long do I need to reach it? Do I need the entire funding goal or just a portion of funds? It’s essential to think through every aspect of funding here. You probably need more than what it costs to produce your project. You also need to be able to market it, distribute it, and deal with setbacks. Think through every single detail of funding.
Next, figure out what makes your project enticing and what will push it over the funding finish line. What rewards can you offer those contributing to get the project off the ground. If you really want people to get on board, you need to offer really good rewards. Most people aren’t going to fund your campaign out of the goodness of their hearts. Your close friends and family will, but the rest want to get something valuable. So what will you offer and why will people want it?
Finally, understand who will benefit from your idea? Who will it reach? Who should it reach? When it comes to marketing your idea, you need to know exactly who you’re targeting. Without this knowledge, you won’t reach your target audience.
You are certainly not expected to have all the answers at this stage. Ideas evolve and outlooks change. But knowing your project and the direction you are aiming puts you well above others vying for crowdfunding dollars.
It doesn’t matter if you’re a creative with a song to sing or an entrepreneur with a widget to sell. Every story has a story, and knowing yours moves the needle much high on your funding success.
Know Your Platform
You’ve crafted and understand your idea, your story, more fully. Now you need a place to tell it.
Needless to say, the crowdfunding world is…crowded. And varied.
There are a multitude of outlets to facilitate your project funding, but which one to use? Different sites provide different services.
Do you want rewards based crowdfunding (contributions unlock rewards) or an equity based service (funding party becomes a shareholder)?
Do you need to keep a potion of the funds even if a campaign does not meet its intended goal?
To help cut through the crowd, here’s a quick overview of five primary crowdfunding platforms:
The Major Players
Continued in Part 2, which just happens to be HERE
John Hawthorne is a health nut from Canada with a passion for travel and taking part in humanitarian efforts. This article was originally published at Floship.Com. Reprinted with the author’s permission.