4 Things You Need to Know About Crowdfunding

4 min readSep 5, 2018

Crowdfunding is one of those concepts that’s been around just long enough that everyone thinks they’re familiar with how it works. However, the ins and outs of crowdfunding are a little more complex than you might think!

Preparing a Crowdfunding Campaign

While you may think you have all your ducks in a row and that you’re ready to pull the trigger on starting a campaign, you may want to slow down a bit. A lot of the time, simply having a great service or product isn’t quite enough. The crowdfunding industry can be highly competitive and you need to consider all the factors to success.

Crowdfunding benefits from already having a captive audience in place.

Do you have a solid marketing plan in place? Do you have a pre-existing audience or are you starting from scratch? How is your business structured? Are you prepared to scale your efforts in the event of higher-than-projected consumer interest? If you’re not able to answer these questions, you’re probably not quite ready to jump into the world of crowdfunding.

While not losing time on your way to market is a make or break ordeal, you also don’t want to rush a half-baked idea out there. Find the right window of opportunity and take the extra time to add another layer of polish to your concepts. This will make you more likely to succeed!

Picking a Platform

This is where helpful crowdfunding consultation comes into play. If you’re unsure of which platform is going to be the best fit for your venture, you have some research to do. Consider the capabilities and limitations of each platform. Also be prepared to offer incentives if that’s a part of your chosen platform’s requirements.

For example, if you’re a creative type who is looking to be the next big face in digital media, a Patreon may be the way to go. It’s smaller and more intimate, but it’s also built on the notion that you’re giving subscribers exclusive access to content ahead of the rest of your audience.

Kickstarter is one of the most popular platforms nowadays.

If you’re developing a new product, however, Kickstarter may be the home for you. It has a proven record of success with new product launches. Keep in mind that Kickstarter is also one of the most competitive platforms out there and you’ll really need to have an airtight business plan to come out on top.

What Are the Risks?

At the end of the day, the biggest risk of a crowdfunding campaign is simply that you might not succeed. Even if you get close to your ultimate goal but are just shy, most platforms make it so the invested money is redistributed to the consumers.

There’s also a chance that, if you’re working with a newer platform, they may not have the means to facilitate your success. It’s often better to seek success on a more tried and true platform instead of opting for a riskier unknown entity.

Most platforms offer consumer protections for your backers but be wary of reaching your goal and failing to deliver on your crowdfunding promises. This is a surefire way to find yourself in a legal gray area.

Kinds of Crowdfunding

There are three primary kinds of crowdfunding: donation, equity, and reward-based.

Naturally, each type of crowdfunding revolves around securing financing.

Donation crowdfunding works how it sounds. The consumer backs your product or service by freely giving away money. It’s not incentive-driven and is one of the hardest ways to hit those higher crowdfunding goals.

Equity crowdfunding offers stock in the company in order to have a consumer facilitate growth and expansion. There are a lot of regulations to keep in mind because this is akin to playing the stock market for a consumer.

Reward crowdfunding gives the donor something in return for their money. Whether this is exclusive access to your service pre-launch, a special product incentive, or other freebies, you’ll need to make it worth a consumer’s while to open their wallet.

Worth a Shot

Crowdfunding is a complex game because there are so many moving parts to success. If you’re interested in crowdfunding, it’s highly advisable that you seek out consultants who are familiar with helping aspiring entrepreneurs achieve their goals on these sometimes finicky platforms. Make sure you’re ready to commit and you’ll be on your way to riding the crowdfunding wave in no time!




Ideazon helps to revolutionize crowdfunding by providing marketing and consultation services every step of the way. Visit us at http://ideazon.com/