If you’re an entrepreneur looking to fund you idea or business dream, yes, the bird is the word. Okay, maybe not literally, but if you haven’t been following along to the Entrepreneur Access to Capital Bill that is making its way through the Senate, you are missing out on a wealth of information for your benefit! Kickstarter, IndieGoGo, RocketHub and other crowd-funding sources will soon be allowed to open their doors to a plethora of small business ideas. Consider yourself in the know. And now that you know about another capital opportunity you can tap into, let’s talk about how that all works.
Let’s look at Kickstarter for a second, it’s one of the most well-known ones out there. Yes, this crow-funding platform allows you to set up an account for whatever project you want to see come to fruition and asks total strangers to donate their money via the internet (a little less stressful than pitching to a venture capitalist, am I right?) Before you jump for joy, there are some guidelines you must follow to be approved and to actually get the funds you need.
1) Please know that whatever the asking amount for your project, soon-to-be business venture, Kickstarter will take a 10% cut. Why? Well, it’s how they make their money. What does this mean for the rest of us looking for crowd-funds? Calculate that 10% “fee” into your asking price.
2) If you do not get all the money you’ve requested by the time you’ve asked for it (because you are required to set a time limit), whatever you’ve collected thus far is returned to the donors. Which simply means, there is no such things as partial crowd-funding. You raise it all or get nothing.
3) In return for their donations, you must offer your donors something of value. And the more they give, the higher the value you return to them. First-borns and minted baseball cards are not on the list, so don’t worry. This is where you, the entrepreneur have to be creative (again).
- Examples: Well, I’ve seen crowd-funding for a television concept in where the creators behind it offered everyone that funded the pilot credit in the show. Those that gave more received a signed copy of the script from the cast and crew as well as the show credit. Those that gave even more would receive a copy of the pilot once it was completed in addition to credit and a signed copy of the script. Needless to say, the project was successfully funded and has come to a completion.
4) It helps, extremely so, if you show the progress of your venture or project along the way with videos or photos so your donors can see you’re actually using the money, their money, as described. If you don’t have a YouTube or Vimeo account to upload those videos, get one pronto!
Crowd-funding is a great cutting-edge idea that will allow so many prospect ventures to take those leaps forward into reality. It’s easy to set up, but the real work comes into play with raising the funds. You have to be creative, engaging and captivating . Don’t let the economy discourage you, because obviously money is out there, you just have to know how to seize it.