Crowdfunding: how it works

manygoodtips.com_25.06.2014_HMwDKmHeuJmM0There is a common misconception that crowdfunding is a specific form of online begging. If you start from the literal meaning of the word srowdfunding, which literally means «crowd funding», a beggar, begging in the subway, really, is something like crowdfunding. But don’t jump to conclusions, man.

In the Russian language, as well as in the Russian reality, long ago there was a clear boundary between the activities of a street beggar, a charity building playgrounds, crowdfunding-project.

The main difference between crowdfunding (in the modern sense of the word) from any other type of fundraising is that people are giving their money not for the sake of purification of karma, or getting any other kind of moral satisfaction, but for the implementation of some very specific product, project or idea in which feels the need.

Simply put: you need (to make a film based on a cool comic book/lived and prospered Wikipedia/sale of a game), so you pay.

However, some crowdfunding projects aimed at the implementation of ideas, the profit from which «feel» harder than the profit from investing in the budget of the future film. For example, investing in the Russian archaeological expedition in Giza, you’re unlikely to get anything other than moral satisfaction and cool pictures from the excavation areas. However, the reality is that if you need domestic science (though not literally, as in the case of the game) sense, you will have to pay.

As you can see, for some features, crowdfunding can intersect with the «working» poor, and charitable organizations, however, these signs, taken together, form a picture unique phenomenon distinct from other types of group financing.

The characteristics of crowdfunding

The lack of seed capital

The main advantage of crowdfunding as a method, is that you start making money can you with nothing but sheer enthusiasm. Oh, and of course ideas. To implement your own project you don’t need connections or daddy’s wallet, you just need Internet access and your brain.

The amount and timing of

Fundraising within the framework of a crowdfunding campaign involves the specific part numbers. Collect «much as you can», and a certain amount in a certain period of time. In case you need to implement the idea to collect the amount of fails, the money is returned to investors.

Concrete goals

Crowdfunding always involves the collection of funds for a specific purpose, a description which must contain complete information about what, where, when and how sponsors will receive as a result.

Colorful presentation

Then the above-mentioned description includes not only information about the purpose of fundraising, but why you’re doing what you’re doing, why your project is needed and important, and who the hell is. Presentation is perhaps the most important part of crowdfunding campaigns, developing and writing the presentation takes about 90% of the time working on the organization of fundraising. The presentation should be as fair, understandable to everyone, expressive and bright. In addition to the text in the description of a particular crowdfunding campaign include images, videos, in short, any content that can make the description more vivid and clear.

Reporting

Any crowdfunding campaign is implemented in accordance with the principle of maximum transparency — this is also a charitable organization, by the way. Each investor provide regular reports on the progress of the campaign, and in the case that after a period of fundraising, the project fails to run, and the status of the project.

Small profit

Often crowdfunding use a method of bonuses: each investor promise some small voznagrazhenie — cum party, photo, postcard, in the case of the fundraising for the movie, can even offer to play the role in the crowd and so on. The nature of the bonus depends on the nature of the project and the imagination of the organizers.

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