Wouldn’t things be so much easier if we could all plant money trees and have an unlimited stock of cash to use on whatever we wanted?
You could create all of those seemingly impossible inventions and business ideas you thought of while you were showering. Of course, you could always have a bake sale or a lemonade stand to raise funds over a painstakingly long time. Alternatively, you could go visit every person in your city, plead your case, present your project, and ask for at least one measly dollar in funding. In the same design of the previously mentioned idea, (but in a much easier form) you could launch a crowdfunding campaign.
What Is Crowdfunding?
Crowdfunding, also referred to as crowdsourcing, is a method of fundraising through small increments of money donated by large amounts of people. Typically crowdfunding is done on the internet through a specific crowdfunding website-based platform.
Who Can Use Crowdfunding?
Anyone can create and launch a crowdfunding project, and nearly any idea can be used. It is an excellent option for people trying to gain support and funding. It can be used for a large variety of campaigns or projects, ranging from tech gadgets, to company startups, to something like helping someone pay a medical expense.
It can an extremely difficult and lengthy process to gain funding for a research project or personal campaign. Saving money and looking for any other sources of funding or income over several years can be rather daunting and almost impossible.
With crowdfunding, you can set a fundraising goal, send it to the public, and hopefully reach your target. Crowdfunding projects don’t necessarily need to have multimillion dollar budgets. Funding goals range from $1,000 to $1,000,000. Also, it is very possible for projects to exceed their initial funding goal. Setting further “stretch” goals gives the late-risers an opportunity to contribute and pledge their support to the project. Unfortunately some projects don’t reach their goal and are sometimes sent to an early grave.
When considering launching your own project, keep in mind that you can set a low funding goal and still have a chance to make more and exceed that amount.
There are multiple crowdfunding platforms available for use on the internet. Crowdfunding platforms, though very similar in objective, are all vastly different. If you’re going to create a project for crowdfunding, it is crucial that you read the fine print which can tell you information such as how much of a percentage of the funds the platform takes from the funded money. Examples of commonly used platforms are Kickstarter, Indiegogo, GoFundMe, and Patreon. Through these websites, anyone can fill in necessary content and launch their campaign or project.
As crowdfunding grows in popularity each year, the amount of money raised for campaigns across all of crowdfunding platforms increases. Along with this, people supporting these projects and even the amount of money spent individually is also steadily increasing.
Just take a look at the statistics on the growth of crowdfunding from 2009 to 2012, and I can assure you it has continued to grow significantly since 2012.
The incentive to donate and support lies within “reward system.” Crowdfunding platforms have a built in perk section with multiple tiers for people who donate certain amounts of money. Perks can include physical things like a beta version or early access of the project or something abstract like a simple “thank you”, which is very common for lower tiers. Some higher end rewards for donating can be very appealing, hence the reasoning behind why a few people may spend a significant amount of money on a project that may not have even left it’s concept phase yet.
My Experience with Crowdfunding
Video games are very popular and common projects on crowdfunding platforms. Throughout my tenure in the video game industry, I have met many developers who have launched their own video game projects. Independent, or “Indie,” games are games that are not big triple-A titles published by large companies. Very often these indie developers have to rely on their own out of pocket expenses to create their game. Crowdfunding is an excellent way for people to help support these developers and for these creators to get the much needed financial assistance.
Listed below are some notable examples of crowdfunding projects the past few years, as well of a few of my personal favorites:
- Reading Rainbow: First and foremost I need to mention Reading Rainbow’s Kickstarter, Bring Reading Rainbow Back for Every Child, Everywhere. At the end of May this year, LeVar Burton, along with a team of people, launched a project to bring back the popular public broadcasting show. In under 15 hours, this Kickstarter was able to reach it’s initial goal of $1,000,000. Over a week after launch, this project continues to grow and has made over $3.5 million dollars.
- OUYA: The Ouya is a video game console that is powered off of the android operating system. It is one of the most successful crowdfunding projects with $8 million dollars in funding. The console was released to the public in June 2013 with a $99 price tag.
- KITTEA: Kittea is one of my personal (and biased) favorites. Using the Crowdtilt (LINK) crowdfunding platform, several cat lovers came together to launch a campaign with the goal of creating a cat friendly tea house in the city of San Francisco. The cats that will populate this tea are all rescue cats up for adoption.
- Double Fine Adventure: Popular independent video game studio Double Fine Productions launched a project in 2012 with the vague title of “Double Fine Adventure”. When the funding period ended, the unnamed game had acquired $3.3 million dollars in funding. This game then went into development and was released with the title “Broken Age” in early 2014 and achieved a very positive reception from the public.
- TUG (The Untitled Game): TUG is a multiplayer video game project that was launched by independent game studio nerdkingdom. The project was launched last year and exceeded its funding goal before it reached the end of it’s funding period. Over 7,000 people backed the project and helped it reach it’s goal of $215,000.
Fundraising through this method is a popular new way for startups or independent developers to give life to their ideas. It is also risky in that you are leaving the fate your creation up to a crowd of strangers. People are able to directly choose which projects are interesting and worthy of investment and support. There are many aspects to a crowdfunding project that all need to be well planned and perfected so that it appeals to everyone and is easy marketable. Much research and planning needs to go into your project before it launches.
What are your favorite crowdfunded projects?
Emma Zwirko is a social media manager at WP Engine. She hails from the East Coast of the US and enjoys video games, frozen pizza, and cat GIFs. You can follow Emma on Twitter @WPE_Emma.