As businesses compete in an ongoing recession for a decreasing pool of money from less than loyal customers, every new idea to bring in money to a project is being considered. Perhaps the most poignant of these is the idea of "crowdfunding."
What is crowdfunding?
Crowdfunding is the act of raising money for a project by taking small amounts of money from many people rather than a large amount of money from a few people. Crowdfunding is typically done via the Internet. There are many trusted websites that administrate this type of funding, and many others are starting to join the party.
Although the concept of crowdfunding has actually been around for many centuries, the Internet has brought the term and practice to the forefront of general society. For the first time, there is now an industry based around crowdfunding.
How do you start crowdfunding?
In order to begin crowdfunding, you must first choose a crowdfunding administrator. Although project managers can certainly execute a crowdfunding effort on their own, it is usually a better bet to obtain the help of a professional. This is an especially good move for an unproven team that is looking to raise money for a project that not many people know about.
In order to stand out on a crowdfunding administration site, a project team will usually have to put together a video that describes the nature of the project you’re asking people to invest in. There is usually a reward system that gives small thank you prizes to people who invest in the idea at a certain monetary level. Other ways to present the project in a positive way include compelling imagery, previews of the project and a storyline behind the project creators.
In a crowdfunding effort, people don’t expect a return on a monetary investment. For the most part, people are investing in ideas that they believe in. It is very important for the project manager to explain why something is being done, as well as how the project will be accomplished.
What are the basics of crowdfunding?
Once you have created your crowdfunding profile and placed it on a professional administration site, you will likely want to connect your campaign to your profiles within social media. Between 25% and 40% of the money that any successful project will receive is from connections that are made on social media.
Most successful crowdfunding projects will also have an email distribution list associated with them. Because of the explosion in projects that are placed on administration sites, project managers cannot sit back and wait for their crowdfunding effort to go viral by itself. It must be advertised through a direct email campaign most of the time.
Understanding why a customer wants to invest in a project is also very important in successfully crowdfunding an effort. You do not need to create rewards that match the monetary value of what investors will put in as long as the rewards are thoughtful and connect the people to the project.
