Crowdfunding is gaining a lot of popularity. This is where people pitch their idea to the masses and ask for people to back them. They do this by posting their idea to a crowdfunding website. Anything from $1 and up is gladly accepted. The collective money received helps fund the individual for their idea assuming they have met their goal they set for the project.
The most popular crowdfunding website is Kickstarter. The next would likely be Indiegogo. There are restrictions on which country you must be part of in order to start your own project for fundraising. However many have found ways around this in order to get their projects funded by the “crowds”.
Unlike traditional venture capital, you are not giving away any equity in your company. You are enticing people to help fund your project either by offering different levels of rewards/perks or simply because they believe in what you are doing.
It is very interesting to what the “kickstarter effect” happen on certain project ideas. They will set their goal at $20,000 and receive over a million. This doesn’t happen to every project, however it has certainly surprised me at the amount of times I see it happen.
Some other crowdfunding websites (other than Kickstarter and Indiegogo and in no particular order) are Fundrazr, RocketHub, GoFundMe, Razoo, PledgeMusic, Fundable, Crowdwise, Appbackr, Crowdfundr, and Sellaband.
You can start projects in arts, comic books, dancing, design, fashions, filming/video, food, games, music, photography, publishing/writing, technology/electronics, web, and theater. Through sites like Fundrazr you can even raise money for disasters, accidents, medical operations, travel, sports, competitions, missions, schools, etc. Really it is up to your imagination and if you feel people will be compelled to back your idea.
A typical fundraising page consists of a video explaining your idea, a very tall webpage with photos, things you have done, goals, what you will do with the money, and reward/perk levels.
Rewards/Perks can be as simple as providing recognition in a book or on a website, sending out tweet, and can also include the first production of a product, posters, t-shirts, sneak peak at a video, being able to name one of the characters in the comic, and complete kits. It really depends on the project and how creative they have gotten.
In general, I have observed that people will easily donate $1 to the cause, they are generally quite open to providing $20, and you can entice them to provide $100+ depending on the product. Especially if it is something they want (and not something they need <grin>). Also if they set their goal lower than what they need, it generally will raise a lot more money because people like to fund a project that has already reached its goal and they know they will receive their reward/perk.
Crowdfunding is very popular right now, ties in well with social media for the marketing, and is fascinating to see what ideas people have come up with. This can make people instant entrepreneurs, especially considering the fundraising periods are generally only 30-60 days and you receive all the money up front. It can be an instant client base for your new product/service. Then if you can get yourself on Dragons’ Den or Shark Tank, you can become an instant millionaire with the right idea.
ADDENDUM: One major difference between Indiegogo and Kickstarter to consider is when you receive your funding. Indiegogo you receive your funding right away in your PayPal account. Also if you setup “Flexible Funding” for your project, then even if you don’t achieve your goal, you still keep the money. They take 4% if you reach your goal and 9% if you don’t. On Kickstarter even if you reach 99% of your goal, you will leave empty handed when the timer runs out for your project. If you do reach your funding goal, then you receive all of the money soon after the timer is done.