Image courtesy of technorati.com
Crowdfunding, is a way to raise funds from small amounts to large amounts from a large number of people, and has not only become a source for raising money, but for public relations as well. Crowdfunding sites have become a great way to raise funds while telling stories that connect with people.
Allowing companies to post videos, to not only explain the product or services that they are trying to fund, but to tell stories that engage people and leverage the power of social media, can become a powerful public relations tool. Posting videos and fund request pages to various social media sites, such as Facebook, Twitter, Google +, and other social media websites, gives future users of the product or service a way to create a personal connection with the project and creates new funding avenues. It gets people that believe in their product or service spreading the word to their social networks as well. And we all know that word of mouth is the best type of public relations that can be generated.
Kickstarter is probably the most popular crowdfunding site. It depends on a funding goal being met, in order for the funds to be transferred to a company. If the goal is not met, the donations are refunded to the individuals that have donated money. If the funding goal is met, it charges a 5% fee along with a 3% to 5% processing fee.
Indiegogo.com is the second most popular crowdfunding site. It works wth two separate funding models. The companies still create a video, but they can choose to follow a fixed or flexible funding model. The fixed model, works very similar to kickstarter’s of getting the goal met or refunding the money. They charge a 4% fee and 3% processing fee + $25 for every non-US wire transfer fee for non-US campaigns. The flexible model charges 4% is the goal is met and 9% if it is not, and 3% processing fee + $25 for every non-US wire transfer fee for non US campaigns. The difference is that if the goal is not met, then the company can keep what funds have been already donated.
Other notable crowdfunding sites are as follows:
Rockethub.com uses a funding model similar to the flexible model of indiegogo.com, and it partnered with A&E for the potential to reach a broader audience when combined with social media.
Crowdrise.com, which was started by actor Ed Norton, funds charities and follows a flexible funding model as well.
Gofundme.com follows a flexible funding model too.
At the end of the day, funding your startup has never been easier. Through crowdfunding, you can reach more people to raise funds, and build a brand that truly connects with human beings.
Click the logos below for videos that explain how some of these crowdfunding sites work: