Even though the economy is not in the most ideal place right now, if there is a money-making trend that is continuing to get even more popular, it would be crowdfunding. That is when a person or even a company decides to go online to request small amounts of money from a large group of individuals in order to pay for some kind of project or venture that they have. Currently, some of the more popular sites include Kickstarter, Crowdfunder, Rocket Hub, AngelList and Quirky.
If you’re someone who’s been thinking about starting a crowdfunding campaign but you’d like a bit more information about what it all entails, we have enclosed five basic things that we feel any participant should know below:
Have a plan in place (first). No matter how awesome your idea is, remember that you are asking people you know as well as complete strangers to support your vision with their donations. Therefore, there’s a pretty good chance that you’re going to receive quite a few questions. One way to keep the emails and comments down is to present a thorough mission statement on the crowdfunding site along with a FAQs sheet. That way, you’ll be prepared for any of the questions, comments or concerns that may arise.
Be patient. Although what may have initially attracted you to crowdfunding was reading stories of celebrities that made thousands if not even a few million dollars, two things that you must keep in mind is one, they are well-known which means that two, they have access to a whole lot more people. That’s why it’s important that you focus on building your own strong network, starting with your family members and friends and to remain patient as you wait for the news to travel.
Factor in expenses. Although some people naturally assume that all they have to do is start a crowdfunding account and wait for the money to start pouring in, the reality is that you must be prepared to pay vetting fees (for background checks). Plus you must also pay between 5-8 percent of the total monies raised to the site that hosted the campaign as well. Look at it in a similar way to how PayPal operates (charging a small fee for certain transactions).
Do some research (and some listening). Whether you’re crowdfunding for an individual project or you’re getting into equity crowdfunding, it’s important to do some research on your particular industry to see the progressions and the competition that you have out there. Also, as people are catching on about your venture, be open to any comments or suggestions that they may have. The more you can learn, the more crowdfunding can work to your advantage.
Be realistic. Although your initial goal may be to raise one million dollars, there’s a pretty good chance that you’re going to only raise a mere fraction of that. This is why it’s so important to remain as realistic as possible when it comes to your expectations. Just keep in mind that if you only raise a few thousand dollars, that’s still more money than what you had before, which is to the total beauty of crowdfunding.