4 Misconceptions About Crowdfunding

By Scott Kloustin on August 15th, 2013 / Comments

Crowdfunding is still a rather new concept to many businesses. The concept is to raise a little bit of money from a large crowd to fund your next project. On most platforms when the financial goal isn’t met, the company will lose the money raised. It’s important to know how crowdfunding works before diving in so that you can crowdfund successfully.

Check out these four misconceptions about crowdfunding.

1. Crowdfunding is basically free money. 

Crowdfunding success is usually due to full-time dedication to the preparation, launch, and sustaining efforts of marketing the project.  A successful campaign translates to even more work to assemble and pack all the rewards, manufacture your product – if necessary – and deliver all promised goods and services to the recipients in a timely manner. And of course all while providing regular updates to your backers to keep them in the loop.

2. All you need for a successful crowdfunding project is a cool video.

Or put another way,  “Good, interesting projects will sell themselves, right?” Less than 10% of Indiegogo projects meet their fundraising goal, according to The Verge analysis, while about 60% of Kickstarter projects fail to meet their goal.

Sure, a cool video helps sell your project’s vision, but it’s not going to sell your project for you and magically drive more exposure. A compelling story told in photos and words can be just as powerful as a video and is necessary to supplement a good video.

3. Most of the money will come in at the end, so you should focus on your efforts on the last few days of the project.

It is more worthwhile to prepare and line up commitments from friends, family, and your network so they can seed the project with pledges right when it goes live. This will give you a better launch velocity which means a better chance of being a featured project on the front page of the site and easier to get press thanks to the fast start of your project.

4. Crowdfunding is only for cool companies or products. 

I am surprised every week when I see a new application for crowdfunding. From crowdfunding medical bills, around the world trips and sabbaticals, mobile application development, real estate, startups and the list goes on and on.

For more on crowdfunding, checkout Fundington’s upcoming crowdfunding event at Walsh College on Wednesday August 21, 3013. It will be packed with information on crowdfunding 101 and how to run a successful campaign.  Registration is free but seats are limited.

Register here: http://knowdocrowdfunding.eventbrite.com/.

Check out Fundington’s platform and comment below if you have any other crowdfunding questions.

About the Author

Scott Kloustin

Scott currently spends time at Fundington working in operations while doing freelance web marketing including lead generation for various clients. He is an advocate of democratizing access to technology and is involved in Project Click, a non-profit organization that teaches computer skills at community centers in Detroit.