Online platforms, such as Kickstarter and Indiegogo, use social media to rally fans and raise donated funds in exchange for some set reward or product. Through a time-limited campaign, a business sets a fundraising goal and accepts pledges. If the goal is reached, pledges are collected, a percentage is paid to the crowdfunding platform, and the business delivers the promised rewards to its backers.
Advantages:
Disadvantages:
Allowing you to maintain complete ownership and control of your business, crowdfunding platforms also get customers to know, like, and trust you through marketing opportunities. Crowdfunding develops a core group of supporters and can quickly determine the level of interest in a business. Also, it can be a quick way to raise money.
While crowdfunding campaigns are great marketing tools, they require an initial investment to launch a campaign. Poor campaigns can hurt a business. Alienating potential customers. Also, if you fall short of your goal, you may get nothing. Even if you meet your goal, delivering your rewards and paying for your campaign may use most of the raised funds.
TIP: Successful crowdfunding efforts typically have compelling videos, a strong brand, and a prototype developed. Be sure they are legal in your state.
