CROWDFUNDING: HOW TO RAISE MONEY FROM STRANGERS

                             

Social media is changing more than the way we market and communicate; it is changing the way we raise capital.

Crowdfunding websites are popping up and connecting entrepreneurs with investors, producers with patrons, and causes with contributors.

According to www.socialmediaexaminer.com, crowdfunding builds upon the idea of crowdsourcing: “the act of outsourcing tasks, traditionally performed by an employee or contractor, to an undefined, large group of people or community (a “crowd”), through an open call.”

Crowdfunding pulls together a community – tightly knit or disparate – to fund a project, business or cause, usually via the Internet.

How crowdfunding works

Although the rules differ from site to site, generally, people (or businesses or charities) pitch an idea, set a fundraising goal and set a deadline for raising funds.

Potential patrons can review the pitches and decide if there are any they would like to support. On most crowdfunding sites, people are not investing in the project or business; rather, they are funding it. They are rewarded if the project comes to fruition, but don’t end up owning any part of the business or project.

To launch your own project, you should start with a pitch: you describe your project, specify what rewards patrons will receive if the fundraising is successful and create a funding goal and a timeline.

Pledges are made with a credit card. If you are backing a project, your card won’t be charged until the project is successfully funded.

How to get your projects noticed/funded

• Choose the right crowdfunding site

Although there is plenty of overlap in many of the crowdfunding sites out there, each caters to a specific audience.

Kickstarter and IndieGoGo are sites creative people can use; ProFounder caters to entrepreneurs, Buzzbnk and 33needs fund ideas with social bent

Not-for-profit organisations can raise funds at sites like CauseVox and FirstGiving, while AppBackr focuses exclusively on mobile app businesses.

• Know your target audience(s)

 In identifying your target audiences, focusing on a passionate niche can help. Many of the successful projects on crowdfunding sites target a specific, narrow audience. The target audience might be focused in a geographic area, religious in nature or share a common background. Graphic novels and music tend to do well, too.

• Plan ahead

It is a good idea to plan.  A Kickstarter project, for instance, can go by quickly.

The vast bulk of backers seem to happen at the very beginning and very end of a project, according to Kickstarter’s own data.

When a project take off it can be somewhat overwhelming to respond to everyone quickly enough, so Frequently Asked Questions-type e- mails that are pre-written help a lot too.

Passionately pitch your project.

You have heard the old saying; “You only get one chance to make a first impression.” It is even tougher on popular crowdfunding sites where there are 30 other projects simultaneously trying to make a first impression on the same page.

Create a compelling name, description and an image as part of your project to help you stand out. A video is critical, too. 

• Have a plan for spending their money

No matter how cool your idea is, most people want to know that you have a plan that will get you there.

You can give a detailed explanation of how exactly you will be using their money and keep all costs transparent. This will build trust in you and credibility in your project.

• Leverage your social networks

It is important to realise that most of your audience may not be familiar with crowdfunding. Chances are you will need to use social media, e-mail marketing and other communication tools to drive your community to your project at a crowdfunding site.

• Break up bigger projects

None of your potential patrons is likely to drop $100,000 on your next big thing.

Your project has a better chance of reaching its funding goal if you break the project into smaller, bite-sized pieces. You might break your video into filming, editing and distribution. Rather than trying to raise enough to start a business and make payroll for two years, start by raising enough to build a prototype of that solar-powered toothbrush you have been dreaming about.

People like to feel like their contribution is going to make a difference. Fifty dollars makes a bigger splash when you’re raising $1,000 than when you’re raising $10,000.

Smaller requests seem more attainable, and people want to feel like they are on a “winning team.”

• Create compelling rewards

Offer plenty of rewards for patrons of your project and get some people’s images immotalised to create more fund experience and memory.

Treat your crowdfunding like a campaign

Pitching a project is the beginning, not the end, of your work. You need to drive people to your project page. Many crowdfunding sites use traffic and early success as indicators of which projects to feature.

• Tell a great story

 As Jeanie Finlay says in her post, Adventures in Crowdfunding, “When I launched the first campaign, I simply put up the trailer and we raised about 10 pence… I made a new trailer with me pitching the film… it made a world of difference. I now believe that people invest in the filmmakers as much as the project.”

• GoFundMe

GoFundMe is a crowdfunding platform that allows people to raise money for events ranging from life events such as celebrations and graduations to challenging circumstances like accidents and illnesses.

From 2010 to 2017, over $5bn was raised on the platform for over two million individual campaigns and 50 million donors. For personal campaigns in the United States, Canada, and the United Kingdom, GoFundMe is a free platform. The company is based in Redwood City, California, with offices in San Diego, California and Dublin, Ireland, and operations in France, Spain, Germany, and the UK.

Brad Damphousse and Andrew Ballester founded the company in May 2010. Both had previously founded Paygr, which is a website dedicated to allowing members sell their services to the public.

GoFundMe allows users to create their own website with which they raise money. During this process, members can describe their fundraising cause and the amount they hope to raise, and upload photos or video. Once the website is created, GoFundMe allows users to share their project with people through integrated social network links (Facebook, Twitter, etc.) and e-mail. People can then donate to a user’s cause through the website using a debit card or credit card and track the progress of their funding. Those who donate can also leave comments on the website in support of the project.

If the user receives no donations, then no charge is made. Payment processors collect 2.9 per cent and $.30 from each GoFundMe transaction. In  June 2017, the Punch newspapers along with some concerned individuals, launched a GoFundMe campaign where people contributed over $15,000 for the family of a late Nigerian police officer, Sergeant Chukwudi Iboko, who died after confronting a four-man gang in a gun battle during  a robbery incident at Zeniith Bank  Wetheral Road branch, Owerri, Imo State.