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This sentiment has even carried over into modern crowdfunding, with project creators successfully tapping into their pool of previous backers for new projects. Crowdfunding has been used to finance everything from the not-so-serious ( $1,050 raised for a Chipotle chicken burrito ) to the more practical ( real estate investments of around $2.57. View top crowdfunding websites with the best track record and help start generating funding for a new venture, business, or product idea. Setting up a crowdfunding campaign is simple: You use a crowdfunding platform to create a profile for your business, project or service, set a funding goal and publish your request online. Crowdfunding is the practice of raising money for a business or project through small donations and investments from many people. Although crowdfunding has been around for years, thanks to the Internet, there are now dozens of platforms that make it easier than ever to reach an audience and raise money.
Crowdfunding is a great way to earn money for a project, product or personal business venture. Since getting its start, crowdfunding has helped entrepreneurs all over the world get the financial support they need. In 2015 alone, crowdfunding raised $34.4 billion - more than twice as much as was raised in 2014, and the numbers have only continued to rise.
Related: 5 Ways to Learn the Nuts and Bolts of Crowdfunding
As of this month, Kickstarter has launched over 300,000 campaigns and more than $3 million in donations has been pledged -- and that's just one of multiple crowdfunding platforms!
Projects funded via crowdfunding platforms are also wide-ranging. People have gotten the funding they needed for causes ranging from paying for funeral expenses to school trips or medical expenses. And of course startups have been a primary focus.
But not all of these projects and campaigns do well. Many have failed to raise what they asked for. Even big projects which seemed well-planned and advertised have failed.
Some of the biggest crowdfunding failures? They've included the iBackPack -- a chic backpack that could have been a data hotspot but suddenly went dark; the Elio Motor Scooter, a three-wheeled electric vehicle, whose release date was indefinitely pushed back; and the Cataldo Medical Care fund, intended to help a woman in Alabama fight 'cancer' (she was later convicted of fraud).
If you want your crowdfunding campaign to avoid a similar fate, these 12 keys can help you establish and market your new personal project or business venture.
1. Do your research.
Before you even start your crowdfunding campaign,do your research. This doesn't mean exploring your product or idea (that should already have been done!): It means researching everything you need to know about crowdfunding, to mine for more success strategies. Not only should you know how to run a successful campaign, you should be aware of all the rules and regulations surrounding this funding source.
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2. Choose the right platform.
There are a lot of different crowdfunding platforms out there. While some are general, others are specific to particular industries and niches. Consider your project parameters and do your research to find the platform best suited to what you're offering. Remember that the right platform will help you connect to your target market and potential investors.
3. Offer more than just an idea.
When you're ready to start your campaign, have more than just an idea in hand. Some projects don't involve a physical product; if yours does, have a working prototype you can show off as an example to potential investors. Even the famed Star Citizen video game, which broke crowdfunding records despite not having even been coded yet, had more to show than just the promise of the world's most anticipated, cutting-edge video game.
4. Know your target audience.
Before you create any marketing materials or post your campaign live, do the research necessary to become familiar with your target audience. Sit down and write out what it is that that audience wants. You can't just assume you know what that is; you need to do actual research and gather real data to help you become more familiar with those you are targeting.
Related: Why Some Small Business Owners Are Turning to Crowdfunding to Save Their Company
5. Create marketing materials.
Once you know who your target audience is and what they want, create high-quality print and web marketing materials. You don't need to copy the videos or fliers of another company -- you should personalize materials to yourself and your message. But avoid tacky, cheesy pieces unless they what truly fit with your project.
6. Set goals.
When starting a crowdfunding campaign, set goals. Not only should you decide beforehand what your total fund-raising goal is, you should also specify time line goals, production goals and any other ones needed to keep your project moving forward.
7. Make the reward worthwhile.
While you're not required to reward your investors, offering something in return for their support makes for a more successful campaign. Make sure that any reward you offer is worthwhile, as well. A hand-written thank-you note is nice, but it won't likely motivate people to invest.
8. Get personal.
Whether your project is personal or is a new business venture, get personal in your message to investors. When people feel that they know you, they'll feel more comfortable with, and trust in, your goals. Opening up about yourself and your situation is a great way to help your campaign see more success. Keep in mind that it is possible to overshare, though.
9. Spread the word.
Once you've published your crowdfunding campaign, start spreading the word. Share your campaign on social media, with family and friends, on blogs and anywhere else where you can get it out there. The wider your reach, the more potential you have for investors to see it.
10. Communicate openly.
Communicate with your investors throughout the entire process. This also helps to build trust. While you don't need to tell them every detail, be as open and transparent as possible. Don't just pitch them or try to sell to them, either; people know when they're hearing hot air.
11. Accept feedback.
Feedback, although frustrating at times, is extremely important for you to make progress -- especially if you're working on a product. The more feedback you receive, the better you'll be able to tell where your pain points are and make a plan to improve the final product so it's ready to go into production.
12. Follow through on your promises.
Don't forget any of the promises you've made during your campaign, whether they were to your entire investor group or certain individuals. If you follow through on your promises, you'll not only build credibility for any future projects, you'll also avoid disappointing your investors.
Related: 9 Steps to Launching a Successful Crowdfunding Campaign
What have you noticed in a crowdfunding campaign that stuck out to you? Do you think it helped that campaign be successful?
Even as little as a decade ago, if you had said the word “crowdfunding” to someone, they likely would’ve looked at you as if you had just sworn at them in Portuguese.
But, today? Crowdfunding is far more mainstream—which means that mention of the term alone will spark an interesting discussion, rather than cross-eyed confusion.
Indeed, crowdfunding is now a common way for businesses to raise some cash in order to launch a new product, fund a specific project, or even just finance their growth.
The popularity of this method is only increasing. Experts estimate that the crowdfunding industry will grow to over $300 billion by the year 2025.
If you aren’t already on board the crowdfunding bandwagon, jumping on can seem a little intimidating. And, the first place you need to start? Finding the best platform for your own campaign.
There are plenty of options out there, which is a great thing. But, it also makes it tougher to zone in on the best choice for you.
We’re here to help. Here are eight different crowdfunding sites that are well worth your consideration.
1. Kickstarter
When you think of crowdfunding, Kickstarter is likely one of the first to come to mind. Founded in 2009, the platform is unique in that it rewards people for donating. Those who support a specific project are given something—from a product to a unique experience—depending on their level of investment.
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Who It’s Good For: The vast majority of projects on Kickstarter tend to be creative in nature. It’s also worth noting that, given Kickstarter’s unique approach, you need to have a specific project for people to donate to that leads to a final deliverable. That means this isn’t the site you want to turn to if you have a less tangible goal, such as starting a business.
What It Costs: Here’s another important caveat with Kickstarter: If you don’t raise 100% of your goal, you get none of that cash. Your project needs to be 100% funded in order for you to collect that money. If you meet your goal? Kickstarter has a 5% fee, and the payment processor will charge an additional 3-5 percent.
2. GoFundMe
GoFundMe is another big name when it comes to crowdfunding. It tends to skew mostly toward individual people aiming to raise funds for something in particular—whether it’s covering medical bills or paying for education.
Who It’s Good For: GoFundMe touts the fact that it’s for “personal causes.” As a result, GoFundMe has a lot of individuals on the platform, making it great for business owners and entrepreneurs who are looking for money to open a new venture or even take their existing businesses to the next level.
What It Costs: GoFundMe is another platform where you must meet your fundraising goal in order to collect. For campaigns started in U.S. dollars, there is no platform fee (it’s 5% for other countries), and payment processors will collect between 2-5 percent.
3. Indiegogo
Indiegogo isn’t as niche as the other platforms, meaning you’ll find a solid mix of fundraising platforms on the site. Additionally, Indiegogo doesn’t require you to meet your fundraising goal in order to collect. However, you will pay a higher fee if you don’t reach your target.
Who It’s Good For: Just about every industry is covered on the platform, making it a good fit for almost anybody.
What It Costs: Indiegogo offers both fixed and flexible funding. Fixed funding is ideal if your campaign can only continue if it raises a certain amount of money (such as needing $10,000 to buy a piece of equipment), while flexible is better if your campaign will benefit from any type of funding. The fee for either is 5%, but if you don’t hit your goal with a flexible funding campaign, you’ll pay a higher fee (which is reportedly 9%). There’s no fee for a fixed funding campaign if you don’t hit your goal. And, of course, there will be additional fees (usually around 3%) from payment processors.
4. Patreon
With an emphasis on creative projects, Patreon works with a subscription model. This means that donors provide regular contributions, rather than making a donation in one lump sum. With a tagline of “Creators, Come Get Paid,” the platform is designed to support creatives in pursuing their passions and making things that others enjoy.
Who It’s Good For: Because Patreon prides itself on supporting creators (from podcasters to game creators to artists), this platform is best if you’re pursuing a creative venture.
What It Costs: Formerly, creatives on the platform would pay a 5% fee for the platform, as well as any other fees associated with payment processing. But, recently, Patreon changed its approach in order to give its creators as much money as possible. Now, donors are the ones who pay a service fee of 2.9% + $0.35 for each individual pledge to cover that payment processing. While it means that fundraisers now get to take home 95% of what they earned, many users were concerned that the additional fees for donors would scare away patrons.
5. RocketHub
Moving away from passion projects, RocketHub is geared toward entrepreneurs who are searching for venture capital. With a designated ELEQUITY Funding Room, you can pitch your idea and see if it garners any interest from donors.
Who It’s Good For: RocketHub states that it caters to entrepreneurs working on projects in the following categories: art, business, science and social.
What It Costs: If you reach your fundraising goal, you’ll pay a fee of 4%, plus a 4% credit card handling fee. If you don’t reach your goal, that fee jumps up to 8% plus the credit card handling fee.
6. GoGetFunding
GoGetFunding may be a site you’ve heard less about despite the fact that it’s been around since 2011. But, it’s another great option, particularly for those who are looking for some flexibility in terms of the projects they can fundraise for. Additionally, GoGetFunding allows fundraisers to keep the money raised—whether they meet their target or not.
Who It’s Good For: GoGetFunding empowers users to raise funds for any cause—whether it’s business-related, personal or for a nonprofit.
What It Costs: GoGetFunding charges a fee of 6.9%, which sounds high when compared with the others. However, it’s worth noting that this fee includes both the platform fee and the payment processing fee—making this one a bit more cost-effective than most of the other options out there.
7. Ulule
Haven’t heard of Ulule? That could be due to location—it promotes itself as Europe’s first crowdfunding site. But, don’t be intimidated by this international approach. It’s still a great option, particularly for those who are looking to fund creative projects.
Who It’s Good For: Ulule says its purpose is to “empower makers and entrepreneurs,” which means it’s a good fit for a variety of projects. However, the audience tends to skew more toward creative initiatives.
What It Costs: Ulule is another platform that takes an “all or nothing” approach. If you don’t meet your fundraising goal, money will be returned to donors with no fee for them. Ulule’s fee for all projects that collect donations in currency other than euro is 6.67% (VAT included) for credit cards, and 4.17% (VAT not included) for donations made using checks or PayPal.
8. CircleUp
Focused specifically on businesses, CircleUp’s intention is to help emerging brands and companies raise capital to grow. Here’s what makes this one different: Companies need to apply and show revenue of at least $1 million in order to be listed on the site — although, the platform occasionally makes exceptions.
Who It’s Good For: Because of its more thorough process, CircleUp is good for entrepreneurs who already have a somewhat established business and are seeking both funding and guidance to take their businesses to the next level.
What It Costs: If you’re approved to be listed on CircleUp, the fee percentage will be determined based on the total amount raised. CircleUp says on its FAQ page, “Our commission is intended to be generally consistent with what companies pay to investment bankers in the offline world for similar size fundraising rounds.”
Over To You
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If you’re eager to start crowdfunding, there’s no shortage of options out there to help you kick off your own campaign.
The best way to get started is to consider your own needs and your goals. With those in place, you can begin to zone in on which of the above platforms will work best for you. Happy fundraising!