Most start-ups aren’t successful in raising funds using the traditional methods, but a new trend of tapping into the power of crowds is emerging. Crowdsourcing has become popular in many areas of business, so it was only a matter of time before it made its way into funding. A number of international crowdfunding sites like ProFounder.com, Kickstarter.com and Peerbackers.com allow entrepreneurs and artists to find donors to support their projects.
Crowdfunding sites let entrepreneurs combine social networking with project fundraising. Financial assistance received through crowdfunding isn’t paid back. Nor does it require pledging collateral, offering personal guarantees or giving up equity. The funds are outright donations from friends and strangers who believe in the dream and want to help. The model is an option for businesses that can launch on a shoestring.
How It Works
IndieGoGo and the more recently launched Invested.in — whose web banner reads ‘Because banking executives just don’t get it‘ — are standouts in the entrepreneurial arena. Project owners from 120 countries have participated in more than 5 000 projects on IndieGoGo.com. Here’s how to go about it:
1. Create An Account
Once you’ve created an IndieGoGo account, the website walks you through setting up a project description, fundraising goals and perks. Projects on IndieGoGo range from a kosher wine bar to a 3D movie called The Dead of Nowhere.
2. Pitch Your Idea
Show your passion, be real and make it scream ‘Great idea!’. Use photos, videos and recordings. Answer who, what, when, where, why (especially why) and how, and give people a reason to want to see your project funded.
3. Offer Perks
Perks entice people to contribute at various levels. Think outside the box and give them character. Think financial (discounts, two-for-ones), personal (their name in lights) and scarcity (only five available).
Find the influencers and get people talking about your project. Use social media, ask for help and make it easy to refer friends. Thank everyone.
IndieGoGo earns its perks by taking 9% of whatever you raise. If you meet your fundraising goal in the time you’ve set, you’ll earn a 5% bonus from the site. If you don’t meet your goal, you still keep the money you raised. Contributions can be paid directly to you via Amazon, PayPal, credit card or cheque.
When Fans Become Funders
By Chana Boucher
An all-guns-blazing, pedal-to-the-metal, rock ‘n roll vampire film is on its way to South African screens, and its producers are calling on fans for funding. The film makers are aiming to cover 50% of the production expenses for Afrikaans vampire flick Bloedsuiers through crowdfunding.
Fans were invited to register on the movie’s website at the beginning of March. They were then given pledge categories ranging from R30 to R2 000. Each amount had different perks, including merchandise, limited edition DVDs and even a spot in the movie. Once the amount was selected, members were diverted to a secure online payment facility to enter their credit card details. The money was taken from their credit cards and transferred to a holding account which the producers could only access once a certain undisclosed amount was raised.
International fans were invited to contribute through Bloedsuiers’ IndieGoGo.com account.
Benjamin Cowley, a producer of the film, confirmed that the response had been encouraging and that money had already been raised.
Before funding was open, a major viral campaign was launched with three teasers released two weeks apart. By doing so the producers also created demand and awareness for the film.