Thanks to it, the Statue of Liberty was built and Marillion organised their tour in ’97. We’re talking about crowdfunding, which had not yet gained its name. Today, this phenomenon has reached a huge scale. If you need money for development of a startup, you want to publish a book, a record, or to organise a charity event – we’ll help you find the best crowdfunding platform.
Crowdfunding is a new form of financing initiatives, in which a community wants to support its realisation voluntarily. The project is thus financed through a large number of small, one-time payments made by the people interested in the initiative – especially internet users. The concept of crowdfunding has been around for about 10 years, but the very concept of a public collection has a much longer history. An example would be the construction of Statue of Liberty, which was financed by donations from the Americans and the French, or the rock band Marillion, who in 1997 collected donations of 60 thousand dollars from internet users to organise their tour. The actual development of this phenomenon, however, dates only from 2008, when the platforms such as Kickstarter.com and Indiegogo.com were created.
Crowdfunding is a solution designed for startups, charities, social entrepreneurs, publishers and self-publishers, alternative artists, NGOs, and public institutions, but also individuals. It’s a chance to increase funds, organise a charity, or conduct a social campaign, a cultural project, and many other initiatives. The first challenge faced by organisations trying to raise funds? Finding out which is the best crowdfunding platform. Below are some tips that you should consider when deciding which platform works best in your case.
- What will you offer in return?
Crowdfunding platforms represent very different models. The one that best suits your case depends largely on what you can offer participants in the collection in return for their investments. The following models can be distinguished:
- Donation without awards – is philanthropic, for example the prize is thanks and the satisfaction of doing something good for others.
- Donation with prizes (sponsor) – the project creator defines the method of rewarding, depending on the amount to be transferred. This model is frequently used by individuals. Projects can be both commercial and social.
- Loan (crowdlending, sociallending) – an alternative to bank loans or payday loans. The borrower – usually an individual – can take out a loan, financed by a larger group of people
- Investment (equity) – in exchange for financial support shares may be obtained in the venture or other property rights, for example, bonds. This model is dedicated to companies implementing business projects.
Although models based on loans make up the majority of the British crowdfunding market, all these models are suitable for financing business, social, and charitable projects.
Crowdfunding is a solution designed for startups, charities, social entrepreneurs, publishers and self-publishers, alternative artists, NGOs, and public institutions, but also individuals. It’s a chance to increase funds, organise a charity, or conduct a social campaign, a cultural project, and many other initiatives.
- What happens if you don’t reach the intended goal?
Crowdfunding platforms require that originators of projects establish specific targets for the funds needed to implement the project. Most of the platforms work so that the organisers only receive the funds when they have reached this threshold within the deadline. These are “all or nothing” campaigns. Some platforms, however, use the “keep-it-all” approach that allows the project organiser to keep all the money collected in the course of collection, regardless of whether they reach the previously established target. To find the best crowdfunding platform, think about which solution is more beneficial for you.
- Does the platform specialise in specific projects?
Although the most popular crowdfunding platforms allow you to raise funds for almost every type of project, there is a growing tendency to create more specialised platforms focused on a specific type of customers or businesses. While the former can reach a larger audience, the specialised platforms can offer services that better meet the needs of a given sector. If you have a niche idea, it’s worth looking for platforms that specialise in your type of project. Examples are DigVentures (archaeological projects) or Crowdjustice (legal projects).
In recent years, the phenomenon of crowdfunding has intensified greatly. To date, this form of funding was focused solely around the startup investments and private loans, but many platforms decided to focus on supporting the needs of charitable organisations and social groups. When seeking a cash injection, remember that:
- It’s worth spending a lot of time to find the best crowdfunding platform.
- Crowdfunding is not for the publication of the project on the platform and waiting for payment, but rather the precise planning and implementation of a campaign, which requires effort and commitment.
- A good campaign requires high skills in communication and marketing.
- When deciding on crowdfunding, you have to accept the fact of the transparency of the process of obtaining funds.
- It’s the recipients who decide who they want to support and with what amount.
- You must be aware of the fact that the amounts that may be acquired in a short time may prove insufficient for the implementation of larger projects