Tuesday, August 5, 2014

Crowdfunding 101 - What is crowdfunding and how does it work?

You've heard a bit of buzz around crowdfunding. Maybe you've heard about Kickstarter or Indiegogo. Maybe someone has asked you to back their project. But you ask yourself what exactly is it? Is it charity? Is it some kind of donation? Do I get something in return? 

Maybe you've never heard those terms and crowdfunding is brand spankin new to you. In either case, I've put together an infographic that should help you out. Here I break it down and make it really simple for you to get the concept of crowdfunding, it's definition and how it helps businesses and you. 

In a nutshell, crowdfunding is the practice of funding a project or venture by raising many small amounts of money from a large number of people. A few people give a little money to raise a lot of money and reach a common goal. That goal can be anything from making a movie, to opening a store, to manufacturing an invention! The crowdfunding model I outline in the graphic below explains a rewards based model also. Sites like Kickstarter allow the project creator to offer rewards levels backers can choose from. This means if you back a project, you also get some cool stuff in return. On top of that, you get to be a part of some new venture or project that you might have a passion for. 

In my graphic below, I've used our Kickstarter campaign to give you an example of how you and the project creator benefits. 

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