Tuesday, November 25, 2014

What is Crowdfunding?

Crowdfunding is a term that you may have heard a lot lately in the news, online, and from friends.  Maybe you’re unsure exactly what it is that people are talking about.  The concept of crowdfunding is quite simple, and in this piece, we’ll take a look at each step in the process.

I’ve got an Idea!

It happens every single day.  An inventor or developer has an idea for a product or service.  That product could be something new and revolutionary, something artistic, or something that improves on an existing product or service.  The problem that you face is simple and very common: you do not have the necessary funds to develop your great idea. 

The enterprising inventor then tries traditional means of raising venture capital.  This often means presenting his idea to large investors or companies.  These meetings are stressful and usually unsuccessful.  Even in the unlikely event that the concept is well liked, it can often come with strings attached including:

·         Providing a majority of the profit that may come from the development of the product to the investors.
·         Outside, often uninformed, input, changing the core concepts of your idea.

This is where many great concepts die.  Not anymore.

Turning to the Public

Now you have options when traditional means of raising the capital for your idea fail, or don’t suit your personality or vision for your project.  Throughout history, people have turned to friends or family to help fund new business ventures or concepts.  Crowdfunding takes that one step further, by turning to the public, asking them to invest in your idea.

Using a medium, such as DonatePages.com, you can present your idea to the public.  You’ll be provided with robust tools to talk about your concept, vision, and how it makes people’s lives better.  People will evaluate their idea, get excited, and make small contributions to your project.  Instead of asking one or two investors for thousands of dollars, instead you’re asking thousands of investors for just a few dollars.

In return, the developer often offers special benefits and perks to those who’ve donated to their project, usually increasing in value by the level of donation.  Perhaps a filmmaker will give an early DVD copy to someone who donates $10.  For a person who donates $1,000, they may offer a producer credit.  For someone kind enough to donate $10,000, that person may get a cameo appearance in the movie.

Crowdfunding is a wonderful way to increase your opportunity to properly fund your invention, service idea, or artistic project without the stress, embarrassment, and loss of control that traditional means of raising investment capital works.  More so, you have the opportunity to develop lasting relationships with large groups of people who may be interested in future projects.  If you have an idea, what’s stopping you from starting a campaign today?  You may turn your dream into a reality!

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