6th September 2017
The Power of the Crowd In Crowdfunding
Crowdfunding Basics & Models
We are a marketing agency focused on launching products through crowdfunding. On a daily basis we find many people have heard of crowdfunding but don’t know what it is. This blog is designed to help identify if crowdfunding is right for your business.
What is it?
Crowdfunding is a tried and tested way of raising finance for businesses. You ask a large number of people to support you through (usually) financial contributions. A target amount is set to show how much you hope to raise. Moreover, through crowdfunding, you can use the internet to talk to thousands, if not millions, of potential funders.
In 2015, the worldwide estimate of money raised through this process was over $34 billion. In fact, The World Bank Report estimates that by 2025 global investment through crowdfunding will reach $93 billion. It offers a genuine alternative for financing a business. It is particularly appealing for retail businesses that are looking to launch a new product.
So, is it right for you?
Most products and services are suitable for crowdfunding in some form. Depending on the crowdfunding model it can provide you with a unique cocktail of market validation, pre-sales and capital investment that fuels business growth.
The most successful campaigns tend to have the following characteristics:
Products and services focused on selling to consumers rather than to other businesses.
The company or team behind the campaign has a proven track record in the field or industry they are launching the product in.
That the product or service is genuinely innovative and brings real added value to the marketplace.
Has an engaged network of individuals or advocates that support the product or service.
What are the main types of crowdfunding?
Equity: This is where investors commit an investment amount into the company in exchange for a shareholding. The world’s largest equity platform is based in the UK called Crowdcube.
Reward / Pledge: Investors receive a ‘reward’ for investing money in the organisation. This can be in several forms, physical or non-physical. It may include a free gift such as a t-shirt or e-book, a discounted price on a product not yet launched, or a once-in-a-lifetime experience.
Debt-based: Investors buy long-term bonds in an organisation, in exchange for favourable interest rates on repayments. Bonds are often 3 to 5 year agreements.
Charitable Donor: A donation to a community project, charity or not-for profit organisation.
Want to find out more?
Crowdfunding is a fluctuating market and subject to the changing trends of investors and consumers. We have been involved in the industry from 2012 and can help you to understand if it is right for you. If so, we will help decided what kind of Marketing plan you need, to execute a successful campaign.