Crowdfunding
is described as a concept with an objective “to collect money from
investors through the Internet, particularly by using social networks or
similar platforms” (Bowman, 2015). This fresh method of raising money has
allowed a special relationship to develop between entrepreneurs and investors.
In order to start a campaign using a crowdfunding service you must first have a
legal promotion and a detailed explanation on what it is for, what you plan to
use the money for and how it can benefit your project. Depending on the focus
of your campaign, there are various types of crowdfunding websites that can be
utilized. Sites like Gofundme can be used for many reasons both personal and
professional whereas sites such as kickstarter and Indiegogo are solely for
creative and professional purposes. It is also very meaningful to know that
each of these sites require a different percentage for their processing fee.
Most range anywhere between 5 and 15% and this should be taken into account
when deciding how much you would need from supporters.
With using crowdfunding as a source for financial investment
you have to know if your campaign falls underneath the reward, donation, debt
or equity category. A Reward campaign means that contributors are receiving a benefit
from you based on their level of contribution, a donation campaign equates to
when contributors are willing to donate with nothing in return, A Debt campaign
is when people lend their money with the expectation to be paid back, sometimes
with interest and lastly, an equity campaign is when investors become
shareholders from their contributions.
The great thing about crowdfunding is that you have a way
for your personal supporters including friends, family and fans to support your
goal. With the expansion of social media, promoting for crowdfunding is fairly
easy because it allows for free and paid promotion through one’s social media
supporters and social media platforms. You can view some of the top
crowdfunding sources here and do
research on what may fit your specific campaign
