Saturday, November 20, 2010

9 reasons to crowdfund your next idea

The biggest benefit of crowdfunding is raising the money you need to make your project or idea a reality. But what other benefits does crowdfunding provide over and above raising extra cash? Here are few reasons why crowdfunding can enhance your fundraising efforts:

1. Make use of your networks
Other methods of raising money require you to give up more than just your time and effort. Bank loans, if you can even get one, are risky and costly – often requiring collateral and interest payments. Grants are even harder to come by and involve lengthy paperwork. Begging, well, that requires you give up your dignity. And we don’t want that.

Crowdfunding, on the other hand, involves avoiding all of the above, and utilizing what you do have – friends! (We hope). Thanks to social media (i.e. Facebook, Twitter, Myspace, YouTube) and email, its easier to reach out to large groups of people than ever before. Launch your project, and then get promoting! If your video explains enough and your idea is support-worthy, you’ll start to see the donations rolling in.

And that leads us on to our next point…

2. Free marketing
Every person who donates acts as an evangelist for your Project. Tweets, Retweets, Facebook posts, and Facebook “likes”, amongst others, are a quick and easy way your supporters can share your project with others across the web. Expect to receive some word-of-mouth promotion from your supports as well. Often, people feel good about their good deed and enjoy sharing it with others. Rewards are another way to earn some attention. Recently, I donated to a project and got a one-off, super cool t-shirt. I’ve never been so tickled about a simple t-shirt. Now every time I wear it, I’m telling everybody I can about the Project I supported and the great experience I had.

3. Free press
If having a platoon of volunteer evangelists wasn’t enough, running a project on a crowdfunding site opens you up to many opportunities for free press. Running a highly successful crowdfunding project is reason alone to receive unsolicited press from third parties – bloggers, online newspapers, radio stations, even television.

4. Idea validation
People like to support good projects. Every donation acts as a vote for your idea. If you launch a Project to raise money for your first solo singing album and you only get a couple of $1 donations, maybe its time to focus more on your guitar playing skills, if you know what I mean. And that leads us onto our next point…

5. Feedback
Crowdfunding is the ideal chance to get feedback from a pool of people who actually care about what you’re doing. Via the blog on your Project page, you can keep your supports informed of your project progress, maybe post some photos of your latest prototype, include links to your latest demos, or whatever it may be. Conclude by asking for feedback from your followers and look in the comments below for the skinny on the general consensus.

6. Monetization
Rewards provide many additional ways to monetize your Project. If you are a musician, offer a free backyard concert. If you’re making a film, offer props from your set or the chance to be in the film itself. In fact, crowdfunding can be positioned as a one-time chance to participate with rewards serving as proof that the supporter was part of an exclusive movement.

7. “Seed funding”
Crowdfunding is often the means to an end, rather than the end itself. Filmmaking, for example, is infamous for requiring a huge initial investment. Even then, you don’t know whether it will be a hit at the box office or not. Crowdfunding enables you to validate your idea and raise the initial funds to pursue it. For a musician, that may be money to fund studio time. Then you can pitch to the labels for a record deal. For a theater group, it may be funds to bring the show to different cities. Then you can make money from ticket sales. Whatever it may be, its a great way to get the funds necessary for that first push towards your dreams.

8. Complete control
Raising money from your friends and fans is a way to avoid the hassle and expense of taking on investors. This is not only true of those with business ideas, but also musicians and filmmakers. By the time all your stakeholders have been paid off, you may find that there’s little left for yourself. Crowdfunding puts the control back into your hands.

9. Crowdfunding street cred
Once you’ve run a successful crowfunding project, the doors are opened for further fundraising projects. Others will see the number of believers it took to achieve that success and naturally have confidence that your next idea will likely be good too. Just don’t expect to run a repeat project. Its about leveraging your earned credibility for your next great idea.
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