What is Crowdfunding and Why You Should Crowdfund Your Idea

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crowdfund your idea

Funding a Startup or an Idea was never so easy in the early 2000s. Crowdfunding then, was a new concept released and platforms like Indiegogo took it to another level.

why you should crowdfund your idea
via fintechnews.sg

Crowdfunding basically means raising money, for the development of an idea or a product, by the large group of people, via various online portals. Crowdfunding could be done for social purposes, charity, launching a book, film or any venture.

Campaigns are launched by the companies, Startups or Entrepreneurs where they set a goal amount that is required for the project. The best pitch is considered to be one, which explains not just ‘what you’re doing, but also why you’re doing it.

Also Read: Top 3 Crowdfunding Platforms Which Estabilshed A New Style of Raising Funds

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Crowdfunding Helps to Pitch Directly to the People

Be it any author of the new Sci-Fi book, or an innovator who recently discovered an electric car, crowdfunding assists them to pitch their product directly to the audience who can help them grow.

It is simply a process, where an idea gets funded by the likes of common people (not investors) and in return they get the product/equity depending upon the type of crowdfunding campaign. Sometimes, highest bidders or the special buyers may get some perks from the campaigner.

Let’s discuss a real life example.

Star Citizen, a game which couldn’t make a mark in the online space, was launched in late 2013 with a motto of reviving spaceflight simulations over a sprawling universe for players.

crowdfund your idea: Star Citizen game
via Fictional Reality

Mark Kearns donated $175 that gained him an access over the alpha version of the game and he further decided to make it big.

He took the game development project on Kickstarter and decided to raise money directly from the global audience. He had his goal to raise $4 Million from the crowdfunding platform, but his wife motivated him to hold and not to seek any investors and therefore he bumped to raise $148 Million via crowdfunding platform and his app donation page.

The game he was going to build with a budget of $4 Million, raised over 37 times of what he’d expected. Therefore, he planned to build a different version, which was more bigger and would give a robust experience.

So, one can easily determine the power of launching a crowdfunding campaign, by taking it directly to the crowd and estimating the return over smaller investments.

Reasons Why you Should Crowdfund your Idea

crowdfund your idea

With the growing demands of customers and time consumption in seeking an investor for Startup, Crowdfunding remains a go-getter and has various benefits that explains why you should raise funds directly from the people who are ready to invest for your idea.

Early Bid and Validation of Idea

Crowdfunding helps you to validate your idea, to know if your product solves any real life problems or just your own problems and whether people are willing to pay for your product or, are simply ignoring it.

Also, it’s a concept of pre-order selling. You’re building your customer base, and filling the pockets before any launch, this is the biggest advantage of Crowdfunding. Although, not all campaigns are perfect and meant to earn profits.

Raising Money in a Short Span

Finding an investor could be a daunting task and could even take years, unless both the parties agree on the terms and conditions. Crowdfunding skips that process and lets you raise seed amount (atleast 25 to 30% of the whole valuation cost) so that you can start the major process of your startup on your own.

While you launch campaigns for funding, you can set time duration that varies from 15 days to 3 months (average) based on your requirements.

Insights directly from Customers

Getting reviews and insights from customers is the most crucial part of any business and if done before launching the product, it consumes both, time and money.

But when you set up a crowdfunding campaign, you’re keeping the product right in front of your audience, and giving them an access to provide opinions, suggestions or reviews for the idea. Therefore, you don’t have to create surveys, roam across the streets or request reviews from people via emails etc.

Also, when an individual comments about your product, it can be ensured that he/she is showing interest to your idea and if they are suggesting something, it could be ensured that they are expecting more from you.

Build a Global Reputation

Reputation is the key factor to determine the stability and growth of any Brand. When you’re launching your crowdfunding project, you’re making it public to the Global Audience.

Anybody present in any part of the World can read your pitch, see your product and invest in it, if they are interested. if your product satisfies their demand and your service is World Class, you’re definitely going to build a reputation for your customer and that could boost your Brand Value.

Best Way of Marketing

Not every Crowdfunding projects reaches their assigned goal in the duration. There could be several reasons for write-off, but you can still take positives from the campaign.

While you were pitching to raise money, you must have made contacts with journalists, bloggers or anyone in the friends circle. No matter you failed to raise 100% of the amount, but at least improved your brand visibility and reach. If 100 people saw your live campaign and 10% of the total manage to share it on their platform, this could bring more 30 to 40 people even if 3 to 4 people in their circles clicked on the campaign link, and this process goes on…

It’s a word of mouth marketing, people may not invest but at least they could share it with their audience or friends and raise awareness of your product even before the market launch. This will surely boost your Brand value, right when it hits the market.

Best way to express yourself

Like said previously, ‘It’s not what you’re doing, it’s why you’re doing’.

People are interested to know who’s behind the project and what is he/she trying to achieve or do with the amount raised.

Every company is judged, not by its product, but by the owner who has a vision for the brand. Crowdfunding pitch is the best way to express everything you want to achieve, you want to provide with the funding you raise. So, ensure that your pitch answers 4 Ws and 1 H (What, Why, When, Where and How) before it gets noticed by any audience. because that’s the best way to convert your audience into investor, or a  customer.

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