Crowdfunding is the practice of raising finance to fund a project by attracting contributions from a large number of people. The contributions are usually tiered and start from very small amounts up to generally not more than €1,000. The funding amount really depends on the nature and scale of the project looking for finance. However, some but not all crowdfunding projects offer contributors rewards, which may differ based on the amount of money donated. Rewards can include copies of a creative work, products created with the funding, special or personalised incentives or public recognition.
Some Crowdfunding Examples:
1. Seth Godin: well known writer and broadcaster raised over $130,000 for his latest book in the USA
2. The Joinery: had a target of €16,000 but raised €18,740 from 520 funders on :fund:it in Ireland
3. Big Comfy Bookshop: needed £1,500 to furnish its shop space in Coventry but 67 backers funded a total of £2,541 on CrowdFunder.co.uk
Though it is not a new concept, crowdfunding today is, in the main, carried out over the internet and it enables individuals, groups and companies to showcase their ideas to the entire world. Crowdfunding platforms first emerged in the USA but there are now local platforms in existence in many countries.
Crowdfunding throws up some really ‘why didn’t I think of that’ ideas and none more so that the Stupendous Splediferous ButterUp knife from Australia. Originally looking for Aus$38,000 these guys raised a cool Aus$360,286, far exceeding their original expectations. Check out the Stupendous Splediferous ButterUp knife here.
Crowdfunding has also evolved to provide equity crowdfunding. It’s a way for companies to use the crowdfunding approach to raise investment capital. In this instance the contributor’s reward is in the form of equity.
Crowdfunding, by the very success of the leading platforms, is testament to the popularity of this funding option. Research the projects listed on the both international and local platforms and if nothing, you’ll get good insight and ideas.