1. Tell A (Your) Story
It’s important to remember the context of crowdfunding and fundraising online. You’re vying for a persons attention while they’re online, and they have tons of other distractions and things pulling their attention away from you.
It’s for this reason that your initial pitch and messaging absolutely must grab your funders’ or lenders’ attention right away and pull them in.
Determine if Crowdfunding is right for you.
Crowdfunding is the process of raising finance from a crowd of participants and creditors who can contribute as little as $100 in your pitch. You set a funding goal, a deadline to raise the finance, the rewards you wish to offer contributors and full details of your pitch. Everyday people are then able to view your pitch on lendpool.com and ask questions and make contributions to your pitch online.
In order to qualify to Crowdfinance on lendpool.com, you must be at least 18 years old and meet our criteria.
What you should know as crowdfunding aspirant before launching your campaign.
1. GREED – It’s not just about the money!
Crowdfunding gives you the chance to raise awareness and build an audience prior to – or while -working on your project. Many successful creators consider these benefits to be more valuable than the funding.
Non-monetary benefits of crowdfunding include:
“Crowdfunding Here to Stay”
Say French Collaborative Finance Players.
At the end of a full day of round table discussions focusing on collaborative finance, all the various players – from both the private and public sectors – seem to be in agreement: crowdfunding is now not a fairy tale but solid reality.
An analysis of the crowdfunding trend of recent years suggests that the sector will soon raise more money than the venture capital industry. From relatively modest total of just below $US3 billion in 2012, the wise crowd is on track to delivery over $US35 billion this year.
According to the World Bank, that pool could balloon to $US90 billion by 2020, utterly eclipsing the Venture and Angel Investor markets which — combined — currently account for about $US60 billion. As the chart — prepared crowdfunder.com from figures revealed by research group Massolution — demonstrates, the model really achieved take off only two years ago and, while VC funding likewise grew in 2013, it flattened in 2014 while crowdfunding continued to grow.
Royalty Crowdfunding Offer
Start ups in need of capital commonly depart with 10% to 30% equity. Sundry factors determine where in this range a start-up falls, but the minority-majority dynamic almost always comes into play. For royalty crowdfunding, however, ownership is not much of a concern. Instead, projects calculate their royalty crowdfunding offer by tracking market averages as well as the product’s own life cycle.
Industry-Determined Royalty Based Crowdfunding Rates:
Before listing a royalty crowdfunding offer, know the market’s going rates. In other words, investigate past projects and read up on royalty distribution in your industry. For instance, through a major publishing house, an author stands to earn 5% to 10% on paperbacks and 10% to 15% on hardcovers (advance excluded). Similarly, musicians earn an average of $2 per CD or $0.25 per iTunes download. For creative projects, then, they can gauge royalty retention based on these averages.
Looking at both examples, a project’s royalty crowdfunding offer must consider the overhead expenses that major publishers and producers incur. Manufacturing costs, for example, could represent 50% of a product’s retail price-tag, so right-off-the-bat the project only has 50% to split with investors. Subtract the averages from above and now the project has 40% or so available. To determine how much of that to give away requires a life-cycle assessment.
Life cycle-Based Royalty Rates
From inception to distribution, the profitability of any endeavor changes greatly, so project creators must forecast the ups and downs in order to appropriately calculate a royalty crowdfunding offer. Generally, an overall valuation must take place before ironing out the final details because the more a project’s worth, the more valuable each percentile is to investors. For this reason, unique, non-competitive projects can depart with fewer royalties.
Understanding value change, however, means that royalty crowdfunding offers should be time-sensitive. Plotting where one phase ends and another begins ensures that a project maintains control of the revenue every step of the way. It also prevents dilution in the final phase. If not time-sensitive, projects can also make royalty crowdfunding offers specific to only one customer channel or circumstance (i.e digital downloads vs. CD sales).
Lendpool’s community can benefit from device-optimized mobile content services. Here are three scenarios showing how Lendpool’s community can take advantage of its powerful technology.
January 2013: Drew Cox and Adam Brandejs developed a portable, 3d scanner and only needed $81,000 to start producing their invention in larger quantities. They set up a crowdfunding campaign that ultimately raised $471,000 for their Matterform scanner.
Thousands are seeking funding for a wide range of projects, from the quirky to the technologically groundbreaking. Inventors from Saskatchewan, for instance, rose over half-a-million dollars to make affordable 3D printers, far exceeding their original goal. They got $50,000 in the first 24 hours.
It isn’t just tech startups and inventors using the model. More traditional businesses, ones that may have difficulty getting financing from banks or government grants, are also experimenting with crowdfunding. Earlier this year, customers of a popular Montreal flower shop, not far from Defalco and Bebbington’s cafe, banded together to help the owner recover from a devastating fire.
Crowdfunding is full of extreme samples. For every handful of projects that earn a few thousand dollars, games like Hex, Massive Chalice and Torment: Tides of Numenera count their earnings in the millions. These games are rare, and not only can they color people’s perception of crowdfunding, but can also have a major impact on the numbers behind it.
January’s 29 successful projects raised $2,976,550, but after taking away the month’s biggest earner in turn-based strategy game Warmachine: Tactics, the other 28 projects that ended during the month hauled in $1,397,600. Warmachine: Tactics received $1,028,950 over its funding goal as well.
Warmachine: Tactics was the only strategy game that was successfully funded among the group in January. While July saw a boost in RPGs, with 11 games in the genre getting funded, January had 12 successful adventure game projects, the most of any genre. Adventure games earned a total of $286,098 thanks to 10,425 people. By comparison, the two shooters funded during the month earned $508,767 from 13,926 backers.
While there’s no way to discern whether the release of popular retail games like Saints Row 4 or funders’ tendency to gravitate to a few extreme samples such as Warmachine had a bigger an impact on crowdfunding for the month, the latter seems pretty clear in January’s data. The month’s breakdown by genre after the break, as well as a list of January’s top five projects;
Action: $114,373 (107.33%) by 4,145 people ($27.59 mean average)
Adventure: $286,098 (146.67%) by 10,425 people ($27.44 mean average)
Fighting: $118,243 (173.89%) by 3,585 people ($32.98 mean average)
Platformer: $125,978 (104.98%) by 2,936 people ($42.91 mean average)
Puzzle: $6,110 (101.83%) by 114 people ($53.60 mean average)
RPG: $65,387 (126.33%) by 1,806 people ($36.21 mean average)
Shooter: $508,767 (253.12%) by 13,926 people ($36.53 mean average)
Simulation: $172,644 (181.73%) by 7,153 people ($24.14 mean average)
Strategy: $1,578,950 (287.08%) by 19,829 people ($79.63 mean average)