Crowdfunding Entrepreneurs

Crowdfunding 101 for Entrepreneurs

2014-01-15-Screenshot20140114at11.05.06AM.pngAre you a Veronica Mars fan? When Rob Thomas, creator of the popular television series, couldn't get a budget from Warner Bros. to make a Veronica Mars feature film, he turned to the crowdfunding site Kickstarter. Thomas raised $2 million on Kickstarter in 10 hours. By the end of the campaign, he had raised $5.7 million, along with tons of publicity and invested fans. The Veronica Mars movie comes out in March!

Crowdfunding is persuading many individuals (a "crowd") to fund your project with small donations - typically in exchange for a "reward" or "perk." A donation might be as small as $1 in exchange for a free music download or as large as $1, 000 in exchange for tickets to attend a red-carpet movie premiere (one of the rewards for the Veronica Mars campaign!). The more donors, the more cash you raise. If you get thousands of donors, you could raise some serious cash. This concept has made the traditional method of trying to raise financing - from wealthy individuals or big corporations like Warner Bros. - on its ear. And that is a godsend for entrepreneurs!

2014-01-15-jennnfte.jpgToday, many websites enable nonprofits, artists, musicians - and yes, businesses - to raise money via crowdfunding. These websites, such as Kickstarter and Indiegogo, act as "intermediaries." They provide platforms that host crowdfunding pitches. If you want to raise money for a project, you develop your pitch, post it on a crowdfunding site and use social media to get the word out about your crowdfunding campaign. Here's the pitch for The Veronica Mars Movie Project.

The intermediary takes a cut of the money you raise. Kickstarter collects five percent. On Kickstarter, if you fail to raise the amount you stated as your campaign goal, you do not get any money. Indiegogo takes four percent if you raise your stated campaign goal and nine percent if you do not. Either way, you get to keep the money you raised. Unlike more traditional methods of funding projects, crowdfunding sites take only a small percentage of a user's collection, allowing them to retain ownership and license over their business idea.

The remarkable success of Thomas's Kickstarter campaign proves that crowdfunding has arrived. The explosion in crowdfunding's popularity is related to the American Jumpstart Our Business Startups (JOBS) Act, which President Obama signed into law on April 5, 2012. Raising capital is strictly regulated by the Securities and Exchanges Commission. The JOBS Act, however, provides new exemptions for the use of internet "funding portals" that enable artists and small businesses to use crowdfunding to raise money.

Crowdfunding

by whatimcalled

It can all be done without banks.

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Here's Why Crowdfunding Is A Bad Choice  — Business Insider
The majority of people today think crowdfunding is a new way to raise capital. What many of them do not realize is that crowdfunding has been used for hundreds if not thousands of years.

Arizona Couple Uses Crowdfunding To Have Baby, Needs $20000  — CBS Local
GoFundMe, a personal funding website that allows users to raise money for personal causes, is one of many crowdfunding sites that appeared recently, joining the likes of Kickstarter, Crowdfunder, Indiegogo, and many more.

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