Crowdfunding is a form of fundraising where an entrepreneur attempts to raise small amounts of money ideally from a large number of people and is typically done over the internet. With funding being one of the main challenges for any entrepreneurial endeavor, crowdfunding has become the increasing alternative for projects in various stages of development. With traditional loans not always being an option, entrepreneurs often seek financial support through this method. If considering starting an entertainment-based venture including music or film, crowdfunding can be a great source to get started. In addition, available to for-profits and non-profits crowdfunding can represent a professional image to any business and brand.
Crowdfunding platforms are centralized allowing business owners to monitor incoming contributions and keep donors informed of status. For example, once a donation is made, the donor may want to know upcoming developments of the venture they’ve contributed funds to. For transparency, it is best to be clear with donors upfront with regards to how contributed funds will be used and managed and their role as a contributor. Fees and requirements vary based on the platform, therefore, it is recommended to research and compare companies that may fit your business needs.
Below are three most commonly used crowdfunding platforms:
GoFundMe is a leading fundraiser for individuals, groups, and organizations. Campaign donations can be withdrawn at any time, there is donor protection guarantee, and a mobile app. The site also helps with social reach and exposure to all social media platforms. To ensure a positive customer experience, agents are available 24/7 for guidance and expert advice.
Patreon is membership-based designed to help artists and creators get paid on work they have already created. For example, fans can pay a few dollars per month or per post allowing fans to become a patron of the arts.
Indiegogo is a platform which allows crowdfunding campaigns for projects in various stages of development and the ability to purchase products through the Marketplace. Flexible Funding is offered which allows entrepreneurs to keep funds even if the desired goal wasn’t met. In the Marketplace, the company offers a sellers guarantee.
Crowdfunding Best Practices
Continuing to gain positive traction, crowdfunding platforms are increasing every year. It is highly recommended that entrepreneurs have a good understanding about their business, set realistic goals, and research the best methods to accomplish goals. It is best to work with one platform at a time to prevent confusion for donors and potential investor. Crowdfunding is becoming a leader for fundraising by making asking for money more obtainable.