Crowdfunding: what, why, how!

Crowdfunding: what, why, how!

• 1.
  Kristina Kapanova 2012
• 2.
  CROWDFUNDING is specific type of crowdsourcing where creators raise funds through crowdfunding platforms. The objective is “the financing of a project of a venture by a group of individual instead of professional parties” (Larralde,B., Schwienbacher, A. 2010). Crowdfunding occurs without any intermediary: artists/entrepreneurs approach the crowd to raise money directly from individuals “The audience, now more than ever, can directly put their money where their preferences lie, instead of relying on an institution to make decisions for them.”
• 3.
  JOACHIM HEMER inhis paper "A snapshot on Crowdfunding“ identifies several types of crowdfunding: 1. Crowd donation – altruistic donation, where the donor expects nothing in return. 2. Crowd Sponsoring – the entrepreneur and the donator agree on a predetermined reward the former one is to give the sponsor after completion of the project. 3. Crowd preselling – through crowdfunding something is to be produced – book, movie, music, product or software, etc. The rewards is early delivery of the produced product. 4. Crowd Lending – the investor lends money to the Hemer, Joachim, (2011), A snapshot on entrepreneur and expects to receive his lending crowdfunding, No R2/2011, Working money and any possible interest . Papers "Firms and Region", Fraunhofer 5. Crowd Equity – crowdfunder invest in shares in a Institute for Systems and Innovation venture, receiving dividends, voting rights, etc. Research (ISI)
• 4.
  1. Raise funding bypassing the 8. Direct access to audience traditional channels. 9. New aspects of the relationship 2. Involving people during the early between artist and audience stages of development – engages 10. Through Crowdfunding you can test, supporters. promote and market the product. 3. Raise awareness for the 11. Your funders become your most work/product. active advertisers. 4. Retain full creative control 5. Keep 100% copyright. 6. Choice and flexibility 7. Gain better understanding of consumers’ tastes.
• 5.
  Kikstarter IndieGoGo Rockethub The biggest crowdfunding For funding projects in the creative For funding projects in the platform. fields – from photography, film, creative fields – from For funding projects in the creative publishing to technology. photography, film, publishing to fields – from photography, film, You can choose between Fixed or technology. publishing to technology. Flexible funding. With fixed, you After the project deadline has Your campaign needs to be receive the funding only if the passed, you can keep all the successful in order to keep the campaign was successful, while raised funds. funds. with flexible, you keep whatever Rockethub has also crowdfunding have been raised. section for science projects.
• 6.
  Music Non-Profit Equity Platforms Crowdfunding Platforms, allowing Crowdfunding platforms that try to help Equity crowdfunding will allow musicians to raise money to social entrepreneurs change the world. entrepreneurs to sell shares produce, record ,distribute their Kiva - people make charitable, interest- directly to investors. music, make concerts, etc. free loans to entrepreneurs from After the passing of JOBS act, SelllABand – complete flexibility in developing countries many equity crowdfunding funding plans, no right holding 33needs: for social enterprises platforms are expected to launch ArtistShare – have to be approved, Advert Activist-U.K.-based platform that in the near future. not clear funding model helps fund advertising campaigns for PledgeMusic – All or Nothing funding social causes.
• 8.
  1. How much money do you want to raise? 2. How many days do you need and when do you want to run your campaign? 3. What platform do you want to run your campaign on? 4. What is the fee of the crowdfunding platform, if you use one 5. What is the transaction fee from you financial institution 6. What is the cost of your perks including production and shipping
• 9.
  When choosing acrowdfunding platform – be aware of its strengths and weaknesses. Benchmark your project against similar campaigns in your chosen category. Take advantage from advice from other crowdfunders – their insight is invaluable. Build clear and strong call to action. Create a sense of urgency around your campaign. Establish early on what makes your product unique and compelling enough that people would want to put their money into it!
• 10.
  Understand your targetaudience How often are you posting updates? Generally your pitch will consists of: Video and Can backers easy and successfully share your project Written Introduction. to their social networks? Decide on the type of approach you will take to Do you have clear and exciting reward tier? Are they introduce your message - humorous, serious, quirky, various tier levels backers to choose from? imaginative, straightforward, etc. Would you develop a website/blog for the project Test how easy it is to read your proposal and whether where you can post updates, relevant information, all the key details and features are described. etc. Is the pitch confusing or easy to grasp even if the backer is skimming your message? Decide on the advertising and marketing activities to promote your project. What are the most suitable social media channels to be utilized? Reference: Steinberg,S.DeMaria,R. Kimmich,J. Migicovsky,E. (2012)The Crowdfunding Bible: How to Raise Money for Any Startup, Video Game or Project. READ.ME
• 12.
  Email kkapanova@gmail.com  Twitter @k_kapanova Google+ Kristina Kapanova Blog www.sfkpublishing.com/blog