KINGMAN - Crowdfunding, the concept of financing a project via a large pool of people rather than a select few investors, has taken off in the last couple of years. Projects ranging from films to tech inventions to humanitarian projects have found success through crowdfunding.
The process is unique in that crowdfunded projects belong to project owners, not the investors. Projects like independent films or yet-to-be-proven inventions thrive in this environment because people can take risks without being held liable by investors. This has lead to some amazing products like the Oculus Rift (a virtual reality headset recently bought by Facebook) and the Pebble Smartwatch (a watch that displays texts and other media alerts from your phone.
The best part about crowdfunding is that anyone with a good idea can seek financing and give their idea a try. But before you decide to propose your idea to the world, here are some tips taken from successful crowdfunded campaigns.
Brand your project
Before asking for money, your project needs to be molded into something marketable on a broad scale. The vast majority of crowdfunding campaigns fail because they are not branded effectively.
Avoid crowdfunding projects that fall into an exclusive niche. You want to appeal to as many people as possible and you don't want to alienate any potential donors.
Make sure your project is something that people can benefit from rather than serving exclusively your own self-interests. If you're creating a film, for example, try to shape your film into something enticing to a donor.
Ask people you know what they think and change your project according to their feedback. You may have to sacrifice some artistic control in exchange for better marketability.
Choose your tool
There are a variety of crowdfunding platforms at your disposal. Here are the three that have been around and have a solid track record.
Kickstarter (44 percent success rate): Kickstarter was one of the first major crowdfunding platforms. They operate on an all-or-nothing model: if a project creator does not meet its project goal, the money is returned to the donors. Kickstarter takes 5 percent of the funds raised and does not guarantee that project creators will deliver on their projects.
Indiegogo (20 percent success rate): Indiegogo is Kickstarter's main competitor but funds fewer projects. Indiegogo takes 4 percent from a successful campaign. If a campaign falls short, the project creator can decide to either return the money or partially fund their project. In that case, Indiegogo takes 9 percent. They also do not guarantee the success of a project.
DonorsChoose.org (70 percent success rate): This is the crowdfunding site dedicated to teachers. Any public school teacher in America can post a classroom project on their site for free, and there is no limit on donation size. The organization is a 501(c)3 charity, so donations are tax-deductible.
The key feature of DonorsChoose is that they confirm the classroom project and mail the supplies out themselves. This allows them to sometimes get supplies much cheaper and ensure that your donation gets to the right place.
Provide valuable rewards
Look at what you're giving donors in terms of rewards and make sure that they fit the price you're asking. $1,000 for a producer credit on your independent film isn't that enticing unless you have a name in the industry. Try to bring your donors into your project and have them influence the final product. Let them act or have them choose colors or design choices.
Also, whenever possible, make sure that your donors have access to your final product.
Follow through and deliver
There are plenty of funded projects on crowdfunding platforms that either sit uncompleted or under-deliver on what they promised. While they do not have to answer to donors, future projects will suffer because they have a track record of not delivering.
Ensure that what you're proposing is doable in the time frame you set up and that you deliver on everything that you promise. You are attaching your name and reputation to a project and most donors are savvy enough to look up what you have done.
Crowdfunding does have a high failure rate, but a failed campaign comes at little to no cost to your project and your backers. If you fail to meet your funding goals, there's nothing stopping you from going back to the drawing board and trying again.