In an age when banks are far more cautious about where they invest, how do you fund that world-beating project? Crowdfunding might be the answer. The Best You finds out about this innovative way of raising cash – and what it can do for you.
CCrrowdfunding – what is it?
Crowdfunding is a way for projects that need funding but don’t meet conventional business criteria to get started. It might be that the project is an arts project, that it is an independent business project without conventional backing. It could even be a more distantly-related request for funding that only helps the project indirectly.
How does it work, nowadays?
Nowadays there are numerous websites acting as crowdfunding portals. Probably the most famous of these is Kickstarter.com. Each website does things slightly differently, but the essential format is the same: a creative individual, group or business with a project to fund pitches their idea on the website.This can be done with the written word, but also often involves a multimedia presentation. People seeking funding set out exactly how much
they need and set a financial target and a timescale within which to reach it.
How did it start?
An early instance of crowdfunding happened way back in 1997, when UK rock group Marillion asked their fans to help fund a US tour. The fan base got together and raised the £60,000 needed – and Marillion have used this method of funding tours ever since.
What’s in it for the investor?
Many of the arts-based crowdfunding sites offer a piece of art in return for crowdfunding, a ticket to a show or a certificate, advertising – it could be anything. For many investors in the arts field, the satisfaction of knowing they got an arts project off the ground is enough.
KICKSTARTER However, part of that presentation includes outlining
what the investor will get back from it should the desired funding come through. This can be anything, and can often be staged depending on the level of investment. For example, one cake making company seeking
investment offered three different levels of repayment for the project – including free cakes delivered to you and a friend, and membership of their cakes club. Another offered advertising in a book they were writing. A third offered a large discount on the product they were designing, once it came to production.