Taking On or Joining With The Crowdfunding Movement
At first I thought this was akin to Angel Investing only for nonprofits. But crowdfunding is for everyone--really. The Quad State Business Journal had an article in 2013 about a Washington,DC restaurant who was in the thick of raising money for local nonprofits--and selling hamburgers at the same time.
Crowdfunding websites offer average people to give money (not invest) to average folks for just about anything your head can imagine--from the proverbial ridiculous to the sublime. There have been small companies looking to raise cash for a new product to a nonprofit looking for a new animal shelter to a guy asking others to fund his vacation (yes, he was successful).
We are only taking on the crowdfunding for nonprofits idea briefly for now.
I have not followed up on the restaurant, but it seems crowdfunding is getting more mainstream every day. I do wish I had the crowdfunding sites around when I had my nonprofit on elder financial abuse. But alas, the financial legislation had not been set in play at that time.
We are talking about a lot of crowdfunding sites to take advantage of, too. I have listed a few of them at the end of the article but it would be easier to research on your own as to quantity. There are very generous people out there who want to see a small company or idea take root.
Why So Many Crowdfunding Websites? Piece of the Action, Baby!
This is an entrepreneurial venture and there are entrepreneurs behind each site idea. As of the end of 2012 there were right at 450 crowd platforms usually manifested as websites. The idea of the crowdfunding website is that you package your idea, your product or service story or whatever into an outline meeting the terms of the website.
There are literally tens of millions of dollars being raised through crowdfunding sources. Word is that just with Kickstarter, it alone has been responsible for over $1 billion raised since its inception.
The websites usually allow the person to flesh out their idea and put it on the site free of charge. A 'fully funded' goal is set on your project and your end result will be in two directions: fully funded or not fully funded. The site owner then takes, say 9 percent or some such figure--give or take--from the funds that you have raised for their services.
Depending on the kind of reward that the backers agree to receive upon giving money, one can distinguish between at least three types of Crowdfunding. -1- Donation-based Crowdfunding, in which the backers essentially donate money to support a cause. Sometimes he/she may receive in exchange a "thank you", a special mention, or even a gadget, but in any case the pledge is essentially a gratuity. -2- Reward-based Crowdfunding, in which the backer receives a reward with a clear monetary value in exchange of the pledge. The reward is often a product or a pre-series item that the backer helped producing by pledging money. In this case the money pledged is similar to paying for a pre-order of a product or service. -3- Credit-based Crowdfunding (more commonly called Peer-to-peer lending or "Crowd-lending"), in which the backer lends the money and receives an interest rate in exchange. In this case the money is pledged in the form of a credit loan. -4- Equity-based Crowdfunding, in which the backer receives shares of a company in exchange of the money pledged. In this case the money is pledged in the form of risk capital.
The 'Crowd' In Crowdfunding Can Be Any Type of Group .
The inputs of the individuals in the crowd trigger the crowdfunding process and influence the ultimate value of the offerings or outcomes of the process. Each individual acts as an agent of the offering, selecting and promoting the projects in which they believe. They will sometimes play a donor role oriented towards providing help on social projects. In some cases they will become shareholders and contribute to the development and growth of the offering. Each individual disseminates information about projects they support in their online communities, generating further support (promoters).
Intellectual Property Exposure--Inventor Beware!
One of the challenges of posting new ideas on crowdfunding sites is there may be little or no intellectual property protection provided by the sites themselves. Once an idea is posted, it can be copied. As Slava Rubin, founder of IndieGoGo said: “We get asked that all the time, ‘How do you protect me from someone stealing my idea?’ We’re not liable for any of that stuff.” Inventor advocates, such as Simon Brown, founder of the UK-based United Innovation Association, counsel that ideas can be protected on crowdfunding sites through early filing of patent applications, use of copyright and trademark protection as well as a new form of idea protection supported by the World Intellectual Property Organization called Creative Barcode.
Where Does Crowdfunding Go From Here?
Crowdfunding exists in just about any democratic country--yes, even Great Britain. Each country puts their own rules and regs on crowdfunding but, again, does not limited citizen participation for the most part.
If you have done crowdfunding for your organization (nonprofit) or company--or even a dream vacation--let us know! We are looking forward to seeing the potential in our Quad State region grow and flourish.
If you would like to create a crowdfunding campaign with one of the sites below, you are invited to make it public record through the Quad State Business Journal--as much info as you want anyway. We would like to see if we can launch or have started five crowdfunding groups in our four-state area to build commerce. If this gives you an idea, shoot me an e-mail!
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Sample crowdfunding resources:
www.Indiegogo.com; www.Equitynet.com; www.Gofundme.com; www.Kickstarter.com
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