“Everybody in the world is passionate about something, and now, thanks to the convening power of the internet, there’s a way for anyone to secure capital for just about anything,” says Kelsey Judd, a representative from crowdfunding website Indiegogo.
As it gains momentum in the world of innovators, crowdfunding is revolutionizing fundraising. Crowdfunding essentially allows anyone to launch an online fundraising campaign for an inventive project idea. Investors, many of whom are everyday people, provide the funds needed to pioneer these proposals.
Caleb Blood, an Aragon alumnus and musician, used Kickstarter to fund his first full-length album. “[Crowdfunding websites] can only be used for creative projects. It’s not a ‘I need money for a new car’ site,” he says.
Although the backbones of crowdfunding websites are similar, each has terms unique to itself. While some are garnered towards startup businesses, others welcome artists, musicians, gamers, inventors and anyone else pursuing a fascinating project. Websites such as Kickstarter approve only a limited number of project pitches, while others, such as Indiegogo, are accessible by all.
Once a project is initiated, the creator is usually required to designate a monetary goal, and then given a time limit to meet said goal. For some “all or nothing” crowdfunding sites, the creator must meet their goal or walk away with no money.
“Most projects offer rewards or perks to people who make a pledge. Rewards can be small, like stickers and t-shirts, or can be very elaborate, like a trip to the premiere of the movie being funded,” says entrepreneur Sondra Suazo. Senior Alvin Ho, who has experience with funding projects on Kickstarter, adds, “[With regular] fundraising, you are helping raise money for something new that may or may not end up happening. But with [crowdfunding], if it gets funded, you know that you will receive some kind of reward.”
Recent success stories in the world of crowdfunding include Reaper Miniatures, a hobby and adventure game company that raised over three million dollars through Kickstarter, shattering its $30,000 goal. Equally impressive is the Pebble Technology smartwatch which managed to make over ten million dollars, passing its $100,000 goal by millions.
According to Sally Outlaw, the co-founder of crowdfunding website Peerbackers, such examples are anomalies. “Although occasionally you hear a big news story of a crowdfunded project raising a million bucks, it is very rare and usually due to the project being a highly sought after consumer product, or the project owner already has a very robust following of thousands of people via Facebook or a blog that they can tap into for support,” Outlaw says.
With the abundance of ideas pitched daily, standing out and attracting investors is no easy feat. However, there are some strategies that can help make a campaign successful. Brian Meece, CEO and founder of crowdfunding website RocketHub, says, “The three core components we find successful campaigns have are: one, an awesome mission spearheaded by awesome people; two, a fan base or audience that’s connected to them; three, cool rewards to offer in exchange for the financial contribution. Those three things together are the ‘secret sauce’ for successful campaigns.”
Aragon alumnus Tim Duncheon, who used Indiegogo to help fund the production of his play, “I’m From Outer Space,” met Meece’s criteria. He says, “You try to come up with some cute, witty enticement to get people to donate. One of the things we did for our project was if you donated $25 or more, you would get a personal haiku written by me. So I spent several days just writing about 30 or 35 haikus themed on astronomy and space [which related to the play itself].”
Emphasizing the importance of one’s social network, Outlaw adds, “Most of us don’t have one person we know who can write us a $5,000 check to get our business going, but we all probably know 100 people who might each give us $50.”
While it can potentially enhance the efficiency of fundraising, crowdfunding requires commitment in both time and effort. “I think the most difficult thing about [crowdfunding] is that it takes a lot of time to fill and ship everyone’s rewards. You don’t just start a Kickstarter campaign and then sit back and relax while people give you money. Not only does it take a lot of effort to get the word out about the campaign, but you also have a responsibility to give each person that was generous enough to contribute to your project the reward they deserve,” says Blood.
Outlaw, whose website focuses on the 15 to 25 age group adds, “It is free to post a project and it is easy to build the presentation on the site using the provided template; the difficult part is dedicating the time required to continually promote your project to your social circle.”
While it has its drawbacks, crowdfunding has created a new domain full of opportunity and discovery. With enough commitment and a proposal that catches the attention of investors, virtually anyone can bring their ideas to fruition. Next time, if selling cupcakes and washing cars isn’t working out, try crowdfunding.
