I am Brian Masterson and I discussing crowdfunding. Since we toured Capital Factory last week and got some good information on funding sources, I figured I would continue the topic.
Most of us have heard of the term "crowdfunding," but for those that have not, Crowdfunding is the practice of seeking funding for a business or idea through the use of a web-based service such as "Kickstarter," "Indiegogo," and "Gofundme," there are dozens of other websites as well. The main benefit of this type of funding is that it gets your project or idea out to the general public and also the world. Though it seems that this option seems easy, there is some science behind it. An article written in Forbes Magazine, by Tanya Prive gives a brief, yet in depth look into crowdfunding.
In the article, Prives points out that it isn't as simple as adding a few pictures or a brief description of your product or service, the entrepreneur needs to take all of the necessary steps as if their product was actually hitting store shelves. Prives lays out the three reasons why people actively support an idea or a product and this is something the entrepreneur needs to keep in mind at all times.
1. People connect to the greater purpose of the campaign
2.They connect to the physical aspects of the campaign such as the rewards
3.They connect to the creative display of the campaign's presentation
More specifically, it will be key for the entrepreneur seeking to fund their business through crowdfunding to include a creative and professionally filmed video that highlights the innovative aspects of your product/service. In addition, a well written and brief description of your product or service and a good array of pictures. From looking through dozens of ideas on Kickstarter and Indiegogo, I've found that those who have set themselves and their ideas up to look like a real business are the ones who are close or have already been fully funded.
The details of funding are pretty simple, you can set up your goal amount and then request people to back your venture for as little as a dollar. Many projects give their backers a wide range of funding amounts that come with either the product itself, usually delivered a month or later down the road, or a t-shirt some other promotional gift.
Now what do the platforms get? Kickstarter for example will take 5% of your funds collected, but if your venture does not reach its goal, then all the money will be returned and Kickstarter will not take anything.
My questions for you are:
1.) Have you backed any ventures that are seeking crowdfunding? If not would you?
2.) What do think makes for a good crowdfunding campaign?
3.) Are there any ventures in our class that could benefit from this funding option?
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1) Have you backed any ventures that are seeking crowdfunding? If not would you?
ReplyDeleteI have not yet backed any ventures that were seeking crowdfunding via the internet. I have helped support ideas though by physically buying their product in person but never via the Web. I think if I liked the idea enough and if I had enough money to spend to support these startups then I definitely would. I know that some of the products give you gifts as you had mentioned. On many of the projects your gift varies according to the size of your donation so perhaps that gives incentive to back the project.
2.) What do think makes for a good crowdfunding campaign?
If you are asking what product or service is the best, it depends on what interests the consumer. As we learned with the lean startup method, listen to what the customer desires. Homemade and technological products seem to be very popular on this website. If you are asking what the best way to market what you are offering, then I would definitely go with gifting the donor according to the amount they offer.
3.) Are there any ventures in our class that could benefit from this funding option?
Pablo's original idea with the Fantasy football jerseys could have done well with the funding option to start up. Alia and Kim's idea could also do well because I think the site also does well with donations for certain causes. An idea like my team's venture would not do so well because it is an application on a mobile device. Maybe if there was a huge huge huge demand for this service and if we marketed the project heavily then we could get enough donations to cover the costs of developing the application.
- Derek D
I personally have never backed any ventures through crowdfunding and I'm not too sure i would use it as a form of investment unless my money can give equity in the companies. After doing a quick look online i found a website called crowdfunder.com, which is a crowdfunding website that gives it investors equity instead of rewards like traditional crowdfunding websites tend to do.
ReplyDeleteI think the best crowdfunding campaigns are the ones that can make people passionate about it. For example environmentally or medically beneficial projects that will progress mankind and create a greater good; this will connect with the most people and attract most funding.
I think that Kim and Alia's idea of the Veterans assistance program would be a good one for crowdfunding because i feel that many people would relate to this issue and once a veteran-friendly project like this gains traction it could attract a lot of donations.
-Alejandro Joya
I have never backed up any venture that was seeking crowdfunding. In fact, I did not know what was crowdfunding until our trip to Capital Factory last week. I find the idea really interesting for investors and also for people who want to learn about new products and services that are being proposed by real entrepreneurs and are seeking for funding. I would definitely fund a venture by crowdfunding because I think it is a way of helping other entrepreneurs and giving them the opportunity we would like to have someday too. I think that the best campaigns you can create no enhance crowdfunding are the ones that create some special feeling of helping out the venture to succeed. Those campaigns that show how the product/service will help and what are their improvements over other already existing product/service on the market. Finally, the best crowndfunding campaign needs to be honest and let the people decide if they are willing to use their money for the venture benefit or not.
ReplyDelete3.) Are there any ventures in our class that could benefit from this funding option?
As a non-profit venture idea, I think the Veterans assistance program will have great benefits from crowdfunding and especially here in the U.S. where people are really proud and grateful of their veterans and how they have served their country. If they put this project up and running I think crowdfunding will be a major force for the financing of their venture to make it real and prosper.
-David Arismendy-
I backed soylent on kickstarter. It is the meal replacement powder that is meant to give you all the nutrients you need to save you money and times. However, they were so successful that they got behind on orders by over 6 months and I have still not gotten my product.
ReplyDeleteA good crowd funding campaign must be realistic in its goal. If they don't reach their goal then they don't get the money. I think the most successful campaigns have a viable product available in the foreseeable future that people really want. People will be willing to pay for an actual thing that already exists rather than an idea or plan. Also, the video has to be great, and the branding and marketing strategy must be on point.
Most all of our ventures would do well I think. Although it depends on the strategy. For example a non profit probably should probably ask for a lower amount as they cannot promise a product, but are only really doing it for good faith or to give people good feelings for donating. A group selling a real product might be able to set a higher goal. However, our class isn't really prepared to ship actual product so that may limit our goal numbers as well. If the proper expectations are set then it can be a successful way to raise some money as well as awareness for our projects.
1.) Have you backed any ventures that are seeking crowdfunding? If not would you?
ReplyDeleteThe only kickstarter's I have ever participated in are the ones where I only donate $1 dollar to the project. One specifically I have funded is an app called "1 Second per Day" The idea was to take a one second video everyday to have a video record of something you did that day with the hopes that in a year you will be able to remember specific things that happened that day. With the dollar donation I was able to download the app for free on the release date. I used it for several months before losing interest and stopped recording my one second videos.
2.) What do think makes for a good crowdfunding campaign?
I think a well designed and produced video depicting the function of the idea is very important if you want your crowdsourcing to be successful. The more clearly and simply you can describe your product or idea the more people you will attract to donate to the cause.
3.) Are there any ventures in our class that could benefit from this funding option?
Any of the ventures in our class can benefit from crowdfunding but whether their crowdfunding will be successful is a different story. It would be my guess that most of our ventures would be unsuccessful if we tried to kickstart them. The company with the best shot of being a successful would be the Veteran Support Team with their venture but it would still be a long shot.
-Louis Mendoza
Great blog post Brian! I haven’t backed any ventures through crowdfunding yet but I would for the same three reasons given in the blog post why people support a venture or an idea. All the suggestions given in the blog post to make a solid crowdfunding campaign are accurate but I think the one that sticks out the most is finding a creative way to reach out to potential backers. I think all of the ventures presented in class could benefit from this funding option. Past kickstarters that I think did well in raising funds through their creative video are the following two organizations, Fluff Bake Bar and Hugs & Donuts.
ReplyDeleteFluff Bake Bar
https://www.kickstarter.com/projects/1172862315/fluff-bake-bar-a-toast-to-just-desserts
Hugs & Donuts
https://www.kickstarter.com/projects/1538311404/love-for-hugs-and-donuts
Kim Zapata
I found a great article on the Time Magazine website: http://business.time.com/2014/01/08/kickstarter-projects-raked-in-480m-in-2013-for-biggest-year-ever/
ReplyDeleteAccording to the article, last year, Kickstarter raised 50% more than 2012 with a whopping $480 million making 2013 Kickstarter's most successful fundraising year to date. "The 3 million people who pledged to support projects last year came from 214 countries and territories and all seven continents (yes, including Antarctica)." I did not realize how huge Kickstarter was until I read the statistics from last year. I would definitely utilize this source while raising capital for a possible venture.
To answer question #2:What do think makes for a good crowd funding campaign?
I believe in order to compose a strategic crowd funding campaign you would have to have solid numbers supporting your vision. I believe the best way to achieve the most realistic results, for a strong crowd funding campaign, would be to follow the lean startup approach. Create a minimum viable product, test the market and pivot or persevere. Once you can prove that consumers want your product or service, with solid numbers, investors could see, for themselves, that you understand your target market and you have successfully established a solution to solve that problem.
1. I have not backed any ventures yet. Crowd-funding is a newer idea and this only seems to work in much more developed economies. I would help out for a good idea to come out, but I am not really sure how much I am willing to give with no returns in the horizon.
ReplyDelete2. I think what best catches a future investor in these kind of sites is having an excellent video that can really exalt the purpose or the good cause for which you are starting this venture. A great video that highlights an excellent service/product for a good cause will definitely be able to collect big bucks.
3. I do not really think a food truck would be able to gather as much money from a website like this. In order to really sell the idea of a good food truck, then the investor should be able to presence the ambience and the environment this food truck will provide. Besides the fact that the market is congested of food trucks and everyday more and more are opening, it can be hard to differentiate amongst other food trucks only through a video. A really good project that would have benefited from this was the snake venom antidote. Since the only problem here is the money needed to put all this project through, a good video explaining how the process works and for what cause will definitely generate some crowd-funding.
Eduardo M
I have never backed up ventures seeking crowdfunding. I am not sure who i could feel backing up a venture with our getting any equity or interest money for the "loan" in exchange.
ReplyDeleteGood crowdfunding campings are the ones that have an excellent promotional video. A video what catches the attention of the possible investors. the video needs to explain the product and demonstrate why investing in this product is a good idea, what is the value that this product posses that other products in the site do not posses. Also I think the campaign should explain how the money received will be used. Another important factor for a good campaign is giving good rewards for the money you give.
I don't think that ventures that are restricted (at lest for now) just to Austin city will raise too much money from a crowd fund website. I think that the one that could benefit the most will be the Application for veterans assistance. This is because Americans really care veterans benefits. So if this application can potentially help thousands of veterans in the United States I think it could raise money.
David Grijalva
1. I backed a food truck idea that a coworker posted on Kickstarter. The idea was to have a food truck that served a combination of Texas, Mexican and Italian food (think chorizo meatballs and brisket tamales). They were actually able to meet their goal, and the food truck, called Gibroni's, is located on the east side at Bar 2211. Although I only gave them $10 because I'm a poor college student, I think I would definitely be willing to back other companies with possibly more money in the future. I't a cool feeling to say that you helped someone start up their business, even if it was only a small amount.
ReplyDelete2. I would say that Prives was pretty spot on with the rules set forth for doing a crowdfunding campaign. I definitely agree that the video is a crucial part, and I also agree that the ability for backers to get something out of the money they put in is a key factor in successful campaigns. One thing that Prives didn't mention, but I felt was a key success factor in my coworkers campaign, is that he was able to get a significant wave of initial funders from friends and family. Many of the employees at bangers chipped in, including the owner, and tons of his friends and family threw in cash as well. I think this initial jump start to the campaign made the idea look more legit, and it got the word out faster.
3. I personally don't see why any company wouldn't at least consider trying a crowdfunding campaign. If you get the money, you don't have to give up equit in the company. If you don't, there aren't any big losses. You might be down a grand or so from making the video and marketing tools, but those are things you can use for other reasons. I think, however, that it might be easier for a certain type of business to gain crowdsourced funding than others. For example I think A product based company might have better luck because it seems that people who fund these ideas are mostly looking at a physical product.
1. I haven't backed any ventures seeking crowdfunding. I am an accredited investor and like to see a return on my investment. I have invested in a few startups during their seed and series A rounds of funding.
ReplyDelete2. I think a good crowdfunding campaign heavily depends on the "look". This includes a high quality video that clearly shows the benefits/applications of your product/service. Presentation is important for the campaign to gain any sort of traction.
3. It wouldn't hurt for any venture from class to try. If it is successful, not giving up any equity in your company is a huge bonus. New products/inventions or movie ideas are ideal for crowdfunding websites.
- Jeran Smith