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Are you an entrepreneur with a million dollar idea but a ten dollar budget? Are you certain your idea will be a success, if only you had some way of introducing it to the public?
If you answered yes to the previous two questions, you should consider a crowdfunding platform.
Crowdfunding is a way of raising money for a project or business venture by attracting investors online. There are a few different services you can utilize to start your crowdfunding campaign, such as Kickstarter, Indiegogo and Crowdfunder.
Typically, you set up your public campaign using the crowdfunding platform of your choice, and then the service allows you to advertise your idea, along with the details, for a certain period of time (using social media to spread the word is an excellent idea); the goal is for you to reach your target goal (in terms of money raised) within that time period.
Your donations are for a specific amount, and you offer different rewards for different levels of monetary donations as part of your crowdfunding campaign. Since competition on crowdfunding platforms has increased, your rewards should be of some intrinsic and/or emotional value, such as T-shirts, limited edition photographs, early access to the product/service, autographed materials or invites to a private launch party.
Crowdfunding has gained mainstream appeal by affording charitable and educational projects the opportunity to reach a much wider and younger audience. Many people have also used crowdfunding platforms to fund films or finance the development of products and services.
If you think crowdfunding is a viable option for your idea, be sure to investigate each of the services to determine which will work best for you. Kickstarter focuses more on creative projects while others may focus on start-ups and raising investment capital.
Crowdfunding can be an ideal way to increase investment capital while also allowing you to market your new idea. If your crowdfunding campaign is successful, it likely illustrates a proven market for your new venture.
It also allows for extra promotion of your new product or service. As we all know, getting the product in front of the public is not always an easy thing to accomplish; crowdfunding permits access to potential customer information, since the people who donate to your campaign already like your product or service, and they are often happy to share constructive criticism and helpful ideas.
Imagine possessing the contact information for a customer base that has already expressed interest in your product or service—that’s an invaluable resource!
You can also use your crowdfunding campaign in order to attract other, more traditional investors. Angel investors who see your campaign may be impressed, and banks may be able to apply the success of your campaign in a loan evaluation.
You may even use your crowdfunding campaign to convince the investors on Shark Tank that your idea is both viable and profitable.
There are many opportunities to fund any number of projects on a crowdfunding platform. Whether you’re looking to fund the development of a new video game, iOS app, dog toy or an independent film, there are online opportunities to reach potential investors and turn that million dollar idea into an actual million dollars.
*Disclaimer*: Harvard Business Services, Inc. is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, Harvard Business Services, Inc. is not responsible for and makes no representations regarding such source’s content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.