What is crowdfunding?
Crowdfunding is a source of capital provided by a broad virtual community that wants to support a creative idea. The funds collected in this way can range from several hundred to even several million PLN. Crowdfunding is “a type of collection and allocation of capital transferred for the development of a specific undertaking in return for a specific return service that involves a wide range of capital providers, characterized by the use of ICT and a lower barrier to entry and better transaction conditions than publicly available on the market”. [Karol Król, Crowdfunding as a source of financing for projects in Poland]
- Money – crowdfunding is based on the transfer of cash, almost always in a dematerialized form.
- Purpose – the allocation of funds and the effects of their spending are clearly defined.
- A wide community – information about the project is available to a very large group of people, usually everyone to whom it will reach.
- Open call – the possibility of project support is presented in an open manner, addressed to an unmarked recipient and does not impose restrictions on access.
- ICT – the whole process of raising capital takes place using ICT solutions.
- Better conditions – raising capital is associated with more favorable conditions than generally available on the market for a given project provider.
- Returnable payment – each time a financial support is given to each person and the company that offers it, a refundable service is provided. It can take a different form, but it can not only have an emotional character. “[Karol Król, Crowdfunding. From idea to business, thanks to community, Warsaw 2013]
There are over 1600 portals operating all over the world, which allow to describe the project, determine the prizes for the supporters and their prices, financial goal and collect funds for the implementation of their own business, social and cultural projects. In 2015, thanks to the crowdfunding mechanism, Internet users financed projects worth a total of USD 5.1 billion in the European Union.
What projects can be financed?
Financing can get any venture – charity, cultural, social and business – if only we can persuade the community to support. This requires good preparation, credibility building, transparency and, above all, commitment. Crowdfunding allows you to test your interest in the idea and raise capital for its implementation. However, it should be remembered that the support each time must be a bonus resulting from the implementation of the project.
What are the forms of crowdfunding?
- donation – mainly charity initiatives, no refund or thank you in various forms)
- remuneration – in return for the support the originator offers his products, services or unique bonuses related to the implementation of the project
- Investment – in exchange for support, the originator offers shares, rights to profits or other forms of material benefits
How to prepare a project?
Preparing a crowdfunding project is an interesting task, relatively easy, but requiring a lot of commitment. The individual portals impose a specific format of the design of the project, but each time it consists of the following elements:
- title – catchy, quite short and explaining what the project is about;
- description – a detailed presentation of the project, the experience of its author, the method of implementation, it is worth adding interesting photos, films or visualizations;
- video – an optional element, but helping to present the project and encourage support;
- financial goal – the minimum budget for the project implementation, it should be set so as to implement the project without lowering its quality, but it would be worth as little as possible, because its achievement determines whether the project will be successful;
- rewards – bonuses for supporters in exchange for payments resulting from the project implementation, may be products or services (ticket, book copy, CD), unique values (admission to the set, autograph, name placement in the final credits) or shares (in equity crowdfunding).
It is also very important to promotional activities that will make many people learn about the project, media will write about it, and Internet users will be interested in participating! For more information, please contact us – firstname.lastname@example.org