It’s getting crowded in the crowdfunding pool!

MoneyWhat is Crowdfunding (also called Crowdsourcing)?
It was approved as part of the JOBS Act (Jumpstart Our Business Startups Act). It provides an online money-raising strategy where the public can contribute small amounts of money and receive “rewards” (generally product or service) for their contribution. It began as a way to help artists, musicians, and filmmakers finance their projects. It has expanded to include small businesses, real estate, video games, non-profits, and many more niche areas. In the United States, equity (stock) in the company is not allowed as part of the reward.

Where is Crowdfunding?
There are funding portals (websites) that advertise funding opportunities and facilitate the payment from the contributor to the owner. The most popular are Kickstarter, Indiegogo, Razoo, RocketHub, and FundAnything.

What are Examples of Rewards?

    •Free mp3 download
    •Listen to an album before it’s released to the public
    •Reprint of artwork
    •Invitation to open house/dinner/launch party

What goes into a Crowdfunding project?

    •Description of project
    •Usually a short video
    •Different ranges/levels of contribution
    •Your organization information
    •How you will use the money
    •What you will deliver and when

What should you watch out for?

    •Funding targets and deadlines
    •Escrow accounts and $ disbursement
    •What happens to the $ if the project fails
    •Funding portal fees, 4%-10% of project funding is common
    •Can you deliver?

Articles of Interest:
10 Questions to Ask When Creating Your First Kickstarter Project
Crowdfunding Indsutry On Fire: Trends to Watch
7 Strategies For Launching A Successful Crowdfunding Campaign

About Guest Blogger

Guest bloggers for the TDS Business Blog.

, , , , , , , ,


  1. Is equity crowdfunding right for your business? | TDS Business - December 26, 2013

    […] payments if the company succeeds. For additional background, read posts from fellow TDS bloggers Laura Schmitz and Jody Glynn Patrick which explain the concept basics and investor […]

Leave a Comment