Crowdfunding is raising money from multiple people – i.e., a crowd (usually online – though the practice has existed offline since before there was a buzzword for it!). So rather than seeking one investor to put in £10,000, crowdfunding means creators can look for a thousand people willing to put in £10.
For that reason, it’s a particularly good choice for projects that can’t go the traditional funding route – if an investor wouldn’t understand why you’re certain there’s an audience for your project, or if you would once have relied on arts funding organisations who these days are more conservative in their grants.
In the last few years, new variations on crowdfunding have appeared as more and more people become aware of it. There’s consumer crowdfunding, equity crowdfunding, charity crowdfunding… what’s the difference?
- Consumer crowdfunding or rewards-based crowdfunding is what most people think of when they think of crowdfunding – this is the Kickstarter/Indiegogo model, where many (not all!) are backing because they get something cool in return, as well as feeling good about making something happen.
- Charity crowdfunding raises money for a specific charity, and this can be a great way for a smaller charity to raise its profile. It’s also related to crowdfunding for good causes, which can be much more personal – someone who needs help to pay their medical bills, legal expenses, or tuition fees. Check out JustGiving and GoFundMe for examples.
- Equity crowdfunding is a new variation on equity investment, on platforms like Crowdcube and Seedrs; backers support an early-stage company by investing – sometimes at very small scale – in shares of the company.
There have been some very high-profile successes in crowdfunding, but it’s not necessarily simple. If you’re crowdfunding you need a crowd – you can’t just put your brilliant idea online and hope backers find it. If you don’t have an existing fan base and active social media accounts, it’s not impossible to succeed, but it’s certainly a lot more work to get ready for launch.
The most successful campaigns may seem effortless, but it took a lot of work and planning to get them to look so simple. When do you start telling people what you’re doing? How do you tell them about it; how much information do you give away pre-launch? Should you go with flexible or fixed funding? Is it worth spending money on advertising, or on buying email lists? What do you say; how do you convince them that your project – out of the many campaigns that float past their Facebook feed – is worth their attention? It’s an intensive marketing campaign and takes a lot of planning.
If you’d like some support in planning your crowdfunding campaign, I can create a personalised week-by-week planner for you to work from – get in touch to find out more.