{"id":42550,"date":"2021-07-15T13:41:00","date_gmt":"2021-07-15T17:41:00","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=42550"},"modified":"2021-07-27T08:14:00","modified_gmt":"2021-07-27T12:14:00","slug":"what-is-crowdfunding-and-how-does-it-work","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/what-is-crowdfunding-and-how-does-it-work\/","title":{"rendered":"What Is Crowdfunding and How Does It Work?"},"content":{"rendered":"\n

What is crowdfunding and how does it work? What are the best websites to crowdfund a project or a business venture?<\/p>\n\n\n\n

Crowdfunding is a way of raising money for a project or a business venture from a large number of people, each contributing a small amount. Typically, crowdfunding is done on the crowdfunding internet platforms<\/a> such as indiegogo and seedinvesttechnology.<\/p>\n\n\n\n

So what is crowdfunding and how does it work? Read more about tips and strategies to effectively raise money through crowdfunding and familiarize yourself with different crowdfunding platforms. <\/p>\n\n\n\n\n\n\n\n

What is Crowdfunding?<\/strong><\/h2>\n\n\n\n

What is crowdfunding and how does it work?<\/p>\n\n\n\n

Crowdfunding means giving money to people, causes, or companies you care about. <\/strong>Companies and individuals around the world have used crowdfunding campaigns<\/a> to fund all kinds of endeavors, such as launching new companies or products, or creating documentaries. In 2010, crowdfunding generated $89 million; by 2013, it generated $5 billion, an amount expected to double every two years.<\/p>\n\n\n\n

Here are four crowdfunding strategies:<\/p>\n\n\n\n

  1. Use video to tell your story. <\/strong>As we discussed in Principles 64-65, video is one of the best ways to engage your audience<\/a>. It allows you to share your passion in a direct way. Campaigns that used video on Kickstarter, one of the largest crowdfunding websites, are successfully funded 50 percent of the time compared to just 30 percent of campaigns without a video. Plus, campaigns with a video tend to raise more money. However, one of the biggest mistakes is describing a need but failing to ask for money. Make sure you have a clear message describing why you need money and how you\u2019ll use it.<\/li>
  2. Encourage engagement. <\/strong>This could mean friends, relatives, and colleagues contributing and sharing the story, or people blogging about your campaign. Before you launch, create a group of supporters who will contribute immediately to create momentum.<\/li>
  3. Reward donors. <\/strong>Assemble a dedicated team of people who can do tasks like thanking donors and share regular updates on your progress. Contributors to fundraising campaigns tend to follow updates. Creating a regular schedule of when you\u2019ll update and sticking to it will encourage regular contributions. Also, create tiered rewards for different contributions, and make sure that your product is included as a reward. Thank everyone who contributes to your campaign at least twice. Repeated thanks may encourage people to support future campaigns.<\/li>
  4. Reassure people that you can finish the job. <\/strong>Updates are opportunities to reinforce your credibility by reassuring people that you\u2019re making progress toward delivering the finished product or result. Another tip: Express gratitude for those on your team during updates. This helps people empathize with you and your experience as you progress.<\/li><\/ol>\n\n\n\n

    Crowdfunding Websites<\/strong><\/h3>\n\n\n\n

    Crowdfunding websites include:<\/p>\n\n\n\n