What is crowdfunding? A handy guide
No longer are bold and brave ideas contained in the minds of the creator. From filmmakers and musicians, to projects supporting social enterprise and community development, crowdfunding has become a reliable avenue for passionate ideas to be heard.
Crowdfunding, as the name suggests, is a funding practice where online users from anywhere in the world can pledge money towards projects and bring them to fruition.
With this, gone are the days where creative minds needed to penny-pinch in order to fund their ideas.
How does it work?
- To start a crowdfunding project, users pitch their ideas to a crowdfunding site in front of millions of ‘potential investors’.
- Users then set a funding target as well as a timeline for the project and online investors can pledge money towards it if they are interested.
- Differentiating from donations, users only receive the funds if the project has achieved its funding target.
- As well as this, crowdfunding investors are given various incentives depending on the amount of money pledged.
As crowdfunding continues to flourish, so do a number of websites dedicated to crowdfunding creative and entrepreneurial projects.
One of the first crowdfunding platforms (and one of the largest) Kickstarter has seen 9.6 million people back a project, almost $2 billion pledged and 93,590 projects successfully funded since it launched in 2009.
Another rapidly growing crowdfunding site is Australian based platform, Pozible. Nearly two-thirds (57 per cent) of projects are successful on Pozible, allowing innovators, change-makers and creative artists make their dream projects possible.
Homepages of some of the world's leading crowdfunding websites. Photo: iStock
Crowdfunding has opened up countless opportunities for opinion changers bring their causes to life. With more projects crowdfunded than ever before, read on below for top tips to successfully run a crowdfunding campaign.
1. Know your audience
Well before publishing a crowdfunding campaign, research successful crowdfunding campaigns and take note of the language used when pitching ideas. Monitor similar campaigns as they are live to notice how the creators are keeping their momentum going
2. Tell your story, and tell it well
Most crowdfunding platforms require users to submit a video pitch, detailing all aspects of the project, why the funds are needed and how the investor’s money will be utilised.
This is the most pivotal component to the campaign.
The elements to the perfect crowdfunding video:
- Make it short;
- Make the message clear;
- Make it authentic;
- Make it professional – investing on high-quality filmmaking material never goes astray;
- Most importantly, drive the call to action.
3. Be as loud as possible, but know the right times to rally
Those who are shy to market their campaign will be less likely to succeed in achieving the funding target.
Reaching out to personal networks for support is a strong starting point in order to spark momentum for the campaign. Once the campaign has launched, igniting a wider public conversation about the campaign is crucial in raising awareness and in turn, generating funds.
A great example of this is from Jesse Polock and Maxi Maxwell, Bondi Beach lifeguards and stars of Network Ten’s Bondi Rescue.
The pair started a Pozible campaign in 2013 titled The Ride East Coast to raise awareness and fundraise for mental health foundation Headspace as they documented their 2,500km jet ski journey from Sydney to Cairns.
Utilising their notable profiles and social media presence, The Ride East Coast peaked media interest and raised over $105,000 for the documentary and the ride of their lives.
4. Create incentives to peak interest
Creating rewards and incentives towards funding is a key factor to the success of a crowdfunding campaigns.
Make sure to come up with creative, tangible and fairly-priced rewards based on the level of funding commitment to the campaign.
One of Pozible’s biggest Australian projects to date is a campaign to rebuild a Victorian town’s only pub. The creators offered incentives such as ‘a round on me’ for $10 funding, a brass plaque in the bar for a $1,000 fund, or even naming rights as the town hero of Buchan for a fund of $50,000!
No longer are bold and brave ideas contained in the minds of the creator.
From filmmakers and musicians, to projects supporting social enterprise and community development, crowdfunding has become a reliable avenue for passionate ideas to be heard without third-parties tainting the creator’s vision.
It is a great example of how technology is breaking down the barriers of traditional funding methods, allowing any individual to realise their potential and create anything they wish with the support of the global community.
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