Money Tools: Crowdfunding

Most companies need initial investments to get off the ground.  But what happens when you think you've struck gold with a great idea and don't know where to look to get the financing to back you.  Now there's a solution and its been around for quite a while.  Crowdsource funding is becoming more and more of a legitimate option for people around the world to pitch to the world their idea and the best part about it is you don't have to give up any equity to receive the funding to make your idea into a reality.  

These outlets such as Kickstarter and Indiegogo are great tools for young or inexperienced business owners to turn dreams into reality.  We've seen phenomenal success from companies raising as much as $8.5 million in funding from over 60,00 contributors for a gaming console on Kickstarter.  Now this is definitely a success story and doesn't happen all the time but it proves that it works.  56,872 projects have reached their target funding and only 6,138 projects raised less then $1,000 (statistics found on Kickstarter's statistics page).  

There are a couple of things that you have to keep in mind about choosing a crowd funding platform.  Although Indiegogo and Kickstarter will gain the most traffic for investors you will also be up against the best competing campaigns.  You want to make sure that potential backers won't look at your project page and compare it to a project that is more appealing and therefore your money will be lost to your competition.  So you need to analyze your company or product and ask yourself if you can compete with the big dogs.  It might make more sense to run your crowd funding campaign on a site like Rockethub.  Rockethub is great because it is becoming more popular for backers and they have programs like FuelPad and LaunchPad that will help you market, connect, and collaborate increasing your chances of success.  

Also look into crowdfunding sites specific to your field.  Appbackr is a site strictly for application startups or Quirky crowd funding for unique inventions.  

Any way you slice it crowd funding is a great opportunity for producing financial backing and is a very promising strategy.