As a consumer of products, you are likely familiar with seeing products on shelves or online and making a purchase. What you may not realize is all of the work and upfront costs it takes to bring products to your home. For small businesses, paying high fees upfront is oftentimes an obstacle in bringing great ideas to market. Enter crowdfunding.
So, What is Crowdfunding Exactly?
Crowdfunding is a way to take pre-sale orders from the market. By launching a project, campaigns can find “backers” who want to support the business.
During a crowdfunding process, the business owners (or campaign) uses platforms like Indiegogo to build interest in their product and raise funds to help launch their next great idea.
According to Andy Murray, “Through crowdfunding anyone can find companies and products. Forming a partnership with innovative businesses was appealing and the opportunity to go on a journey with these companies as they grow, and hopefully share in their future success, is exciting”
Crowdfunding is one of the most essential techniques for raising funds in recent business trends. This was driven by the pandemic’s impact on investors - they simply weren’t there. Founders and small businesses turned their attention to the crowdfunding space so they could involve their community in launching a new product. According to the Crowdfunding Statistics updated on February 3, 2020, there were about 6.5 million crowdfunding campaigns worldwide last year.
What are the Types of Crowdfunding?
Rewards-based crowdfunding is considered when individuals donate to a project or business with the expectation of receiving non-financial rewards in return. The rewards may be products or services that proceed due to a successful business strategy established by crowdfunding. THIS IS WHAT MAMAP IS DOING - CLICK HERE TO LEARN MORE.
Equity Crowdfunding is termed as a process of raising capital in which the investors provide funds to a business startup and receive a percentage of equity in return.
Peer-to-peer lending is when the crowd lends money to the company with the agreement that it will be repaid with the interest. It is very similar to traditional bank borrowing except that the company borrows from lots of investors.
Donation-based crowdfunding is projected to aim for a charitable project that gives no financial or material in return. Usually, the amount of Donation-based crowdfunding is comparatively low but sometimes unpredictable.
What are the Major Platforms for Crowdfunding?
With the perfect business strategy, it is crucial to choose the right Crowdfunding platforms. Numerous websites serve to fuel your startup. Let us review some of the major platforms for Crowdfunding.
Indiegogo is the leading user-friendly Crowdfunding platform where you can raise funds for almost any kind of project. The exhaustive service includes 3 overarching categories further divided into 28 subcategories; Creative Works, Tech and Information, Community Projects.
According to Indiegogo “It is the only crowdfunding platform where you have the option to keep all your funds even when your campaign does not reach its goal”
This is where MamaP is launching, click here to learn more. Or here to sign up to receive up to 50% off on launch day.
It is another popular Crowdfunding platform around the globe. It is inclined more towards creative projects and inventions. There are several categories offered by Kickstarter such as Design & Tech, Film, Food & Craft, Games, Comics & Illustration, Arts, Music, and Publishing.
But it comes with a major drawback, Kickstarter doesn’t allow projects to offer investment opportunities and revenue sharing. Also, a project cannot be raised on the behalf of the charity. MamaP gives back 5% of sales, so we cannot launch on Kickstarter.
This Crowdfunding platform made an exception for the supporters or donors. Unlike all the other platforms, Patreon is a monthly subscription platform rather than all one-time donations. One can support an idea or project from as little as $1 per month and as high as he wants to go.
The purpose of Patreon is not to support a startup or a particular project but to help an upgoing creative project
How Does Crowdfunding Work?
Crowdfunding platforms enable businesses to “fundraise” and “backers” to pre-order new products. The “campaign” fundraiser proposed its business idea or strategy in front of the crowd so that they are inspired by the idea and ready to make financial pledges.
Fundraisers are obliged to pay a fee to the crowdfunding platforms if the particular campaign of fundraising is successful. In return, crowdfunding platforms are authoritative for providing a secure, convenient, and accessible service.
Why Indiegogo is the Best Crowdfunding Platform to Use
One of the commonly asked questions when dealing with a project is which Crowdfunding platform is the best option for you. Because the right platform appears to have a great impact on your business or product success.
Indiegogo the best crowdfunding platform due to its comprehensive service since 2008. They have raised 800,000 ideas since their launch and still counting.
The platform is surprisingly trendy in the market right now thus launching 19,000 new campaigns per month.
Indiegogo offers a wide range of tools that authorize you to integrate with multiple social platforms such as Google and Facebook.
Projects on Indiegogo have raised on average of $41,634 each, which is considered the highest average amount ever collected by a Crowdfunding platform.
What Are the Benefits to the Backers?
A backer is simply someone who places a pre-order. By pre-ordering, you help bring a project to life. You select a “perk” or package and are offered an early bird discount.
What Are the Benefits to the Company?
Using Indiegogo, a company can pay for upfront costs to start production. Indiegogo has fixed and flexible funding options that grant you eligibility to use the money for production costs.
Furthermore, the funding approach is extremely high. For instance, Stu and Cedar Anderson, who used crowdfunding to take their modern “Flow Hive” beehive design, from concept to market. They succeeded to raise $2.1 million in one day on Indiegogo, which is far exceeding their fundraising goal of $70,000 covered within an hour.
Therefore, Indiegogo has great insights making any crowdfunding campaign achieved.
Crowdfunding Helps Companies Launch New Products
Whenever a company is intended to launch a new product without getting it financed, the crowdfunding platform permits you to showcase the product idea to a huge audience so that they can review.
Crowdfunding involves others in the development process. It is a powerful way for getting the important feedback from early customers.
Crowdfunding allows people to discover new brands and products. Even after the Crowdfunding campaign is finished, you can connect with a community to share your challenges, setbacks, and productivity.
MamaP is launching a new game changing dish brush soon on Indiegogo. With a reusable handle made from recycled plastic and a replaceable head that’s 100% compostable. Sign up now to be notified when MamaP launches. Early bird savings of up to 50% on day 1!