What Is Crowdfunding?
The translation for Crowdfunding is crowd funding . Crowdfunding translation is widely used. All uses deliver what the idea is. In this article we will define you crowdfunding in business.
Anyone who wants to pull the timeline of this way of financing projects can reach the Renaissance and the patrons of the arts.
In fact, one of the platforms that we will mention below, Kickstarter, launched a project called Patrons (Patrons) to encourage investments in larger-scale projects.
But if the idea of many people funding a product since its inception is something old, the guise given in recent years was innovative.
If before, a crowdfunding in business basically passed a basket from hand to hand asking for help, or else a deposit in the checking account, now we have online platforms.
And they began to offer the possibility of mediation between those who want to create and carry out a project and those who want to finance it.
And coming to the online world, we’ve reached a buzzword: funding becomes scalable.
More people can meet projects that seek these resources and the ease of contributing is greater, needing just a few clicks.
The idea is fascinating because it allows for a very close connection between audience and creator.
To cite an example: a musician who does not have a contract with a record company can reach their fan base and propose recording an album if a certain financial goal is reached.
The idea of crowdfunding in business removes several intermediaries: there is no record label, distributor, merchant and profits and all tastes of those involved. It’s the creator talking to his interested audience.
How Does Crowdfunding Work?
The creator has an idea, puts it on an online platform, says what the phases will be and informs what resources are needed.
Something very important also comes into play: what will be the rewards of those who support right away.
That’s why we’re not talking about a donation. There is the counterpart.
Everything is up to the creator of the project, who decides what this rewards program will look like.
It can be anything from receiving the product in a special edition, having the first “bakes” in hand, some form of thanks, a prototype, in short, it depends on the initiative.
It is important to make it clear that it is not a rule that those who contribute will receive what will be created with the money. For example, Vasco da Gama is building its new Training Center and of course not everyone will be able to take advantage of it.
Among the rewards are a thank you on the website and a digital certificate (for those who collaborate with 15 reais) to the possibility of a different experience in a club game, with a visit to the locker room and even the chance to take a penalty at halftime. This package costs 2 thousand reais.
Something that is a rule is that if the survey does not reach the minimum goal to start the project, the money is returned.
What Are Crowdfunding Sites?
The idea of crowdfunding in business soon spread and the platforms of the genre multiplied.
Below we will talk about some of the biggest crowdfunding sites.
Kicking
Definitely one of the biggest names in the business. And big enough to accommodate the example mentioned above of the Vasco da Gama CT construction project. So far this project has generated more than 2 million reais in contributions.
There are several successful projects that are highlighted on the page, such as the collection for the construction of Rancho dos Gnomos , a place to welcome domestic animals and victims of abuse. More than 1 million reais were raised.
Catharsis
Also one of the leading brands in the crowdfunding area, existing since 2011. On its website, Catarse reveals that more than 111 million reais were allocated to projects published on the platform.
In addition to being able to contribute to one-off projects, there is also the opportunity to participate in subscriptions, collaborating monthly with content creators on ongoing projects.
Improvement
There are more than 2400 projects and BRL 43 million in the platform’s history. Benfeitoria does not charge commissions and is more linked to the cultural area, supporting, for example, the Rio Film Festival, which so far has raised over 200,000 reais .
International Crowdfunding Sites
- Kickstarter: created in 2009, it is one of the largest crowdfunding sites in the world, with more than 4 billion dollars raised for the 445 thousand projects posted on the platform.
- GoFundMe: in terms of numbers, no one beats GoFundMe, which has passed the 5 billion dollar mark and more than 50 million contributions. GoFundMe is branded as having several personal projects, supporting the payment of college tuition or health care costs.
- Indiegogo: the company, created in 2008, was an early adopter and can be proud of having reached basically every country in the world, with supporters from 235 territories. Its biggest project generated 12 million dollars in contributions and shows the importance of sustainable development : the creation ( Flow Hive ) is a beehive that allows the extraction of honey just by turning a lever, replacing the current method that destroys the hive and interferes with the local bees. Simple, isn’t it?
Disadvantages Of Using Crowdfunding
As we’ve already talked a lot about the advantages, let’s start with the disadvantages of crowdfunding in business .
The first of these is the work required to raise the money.
Returning to the example of the artist who reaches his target audience with the idea of recording a new album, this musician’s work is much greater than in the past.
A well-known musician had “only” to create the songs, go to a studio, record them and then promote his work in concerts, TV shows, radio, etc.
Today this artist needs to get involved in other areas. You need to create the project, think about the rewards, publicize this movement, answer questions and all that before entering the studio.
Of course, not all artists could afford to sit on the couch and just wait for the record company to deliver everything chewed up.
But today, to succeed in the crowdfunding world, you have to have an entrepreneurial streak and know, for example, how to implement a digital marketing strategy .
If your campaign is not well executed, the second disadvantage of crowdfunding in business comes in: there is nowhere to run.
If your interested audience isn’t up for a new album, a book, your book project, in your hive that doesn’t stress the bees, the message will be clear.
From there, convincing a partner, be it a record label, publisher or business of any kind, that your idea has market value and deserves attention will be a difficult task.
Advantages Of Using Crowdfunding
As there is no lack of advantages, let’s go to them.
The engagement between the creator and the target audience is unique. The buyer doesn’t just go to a store, look, compare and buy. He finances the creation and all the processes, having a much more active position.
And this not only generates loyal buyers, but also propagators of your idea.
Another advantage: the creator is not so financially exposed. He won’t need to put all the research and work out of his pocket before starting sales and finally making money.
Your effort can be appreciated right away.
You can also measure the interest generated by a product in advance. This avoids investments that go nowhere and the pain of failure when the product doesn’t sell.
If the idea is not a good one or there is no market for it, this can be made clear in the fundraising process. So the sides can move forward without trauma.
Finally, Crowdfunding in business platforms take away some headaches. No need to worry about payment methods, how much is in cash, how much is left to receive. In addition, your initiatives can travel the world, having a much greater reach than crowdfunding or fundraising campaigns in your neighborhood or at parties and events .
Finally, a crowdfunding campaign doesn’t have to go through the funnels that existed a short time ago.
A writer no longer needs the stamp of a publisher, he can simply fund his book with a campaign. A musician can make an album without needing a record label.
Small entrepreneurs have an alternative to fundraising without needing a bank loan.
This allows for greater niche initiatives: products targeted at a certain audience and funded right off the bat by those end consumers.
After all, we are talking about an excellent way for employees of a company who have been released to take ideas from paper and become entrepreneurs .
How To Launch A Crowdfunding Campaign?
It doesn’t matter if you don’t have a business or are an entrepreneur with a company formed. If you are more or less than 18 years old, if you have graduated or have not finished high school. What matters is what you have to offer.
The usual thing on Crowdfunding in business platforms is to find products that have a certain appeal and their market – a website, a music album, a book – or else something completely new, which can arouse interest in creativity, like the beehive with faucet that we talked about. above.
Regardless of the option, it is important that before creating the project, you investigate the target audience for the idea and its reception.
This way you can target, adapt and better promote crowdfunding, for example, on social networks. Facebook groups can be a great one. Reach out to potential interested influencers as well.
Let’s imagine that your idea is to write a book about a football club that has gone extinct. Contacting sports journalists and groups of sports fanatics will test the interest generated by the project. And it can not only be a way to spread the news that the project exists, but also activate sources to be interviewed.
What if the idea is very different? Let’s go back to the hive case. There is not much parameter and reference for this “madness”, besides a need observed by creative entrepreneurs.
Even so, it is interesting to probe the reception of the idea with different people, beekeepers, traders and other entrepreneurs.
If you don’t want to open the game to deliver an idea that could be millionaire, register the trademark or patent immediately and only then expose your idea.
It is also not necessary to show everything you will do, just enough to know if your product will meet a need. That is, if it will be useful and welcome.
Other Tips For Launching A Successful Crowdfunding Campaign
We were more generic in the topic above. Now is the time for the most accurate tips.
- Be transparent: open the game with your potential collaborators. Expose expenses, explain challenges, and give clear deadlines.
- Don’t try to become a millionaire at this stage: there are other times to get rich in the process. When creating a crowdfunding, putting a remuneration for the time spent is not out of the ordinary. But don’t overdo it: you can make money in a second phase, when investors are interested in scaling up or getting the product to market.
- Exposing the idea is just the beginning: be a propagator of the idea and publicize it and crowdfunding in business at all times. Use social networks , create a website, make a video, talk to people and invest in word of mouth.
- And finally, think about the rewards: just giving the product to those who nurtured it from the beginning may not be enough or viable. Think of a rewards program that values employees who have trusted you and create multiple stages to encourage greater collaborations.
What Is Equity Crowdfunding
The idea of crowdfunding and its enabling platforms sparked the imagination. A product of this is equity crowdfunding (Investment Crowdfunding), aimed at investing in startups.
In this modality, as well as in crowdfunding in business , there are websites that allow startups seeking financial contributions to act, grow and innovate to expose their ideas. Whoever collaborates, in this case, will have a stake in the company.
That is, instead of supporting the creation and launch of a product, the investor in this case supports the company itself and will gain from its growth.
