Crowdfunding 101 Toggle

Read and learn in 2 minutes the basics of crowdfunding thanks to the list of Frequently Asked Questions we’ve prepared for you.

What’s exactly “crowdfunding”?

“crowd” + “funding”. As defined by Forbes, crowdfunding is “the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet.

CF-Video
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I’ve heard there are different kind of crowdfunding. Is it right?

There are basically 3 kinds of crowdfunding models based on what funders got in exchange for the money pledged:

Donation/Reward Crowdfunding

DonationModel
Crowdfunders receive Nothing or a Reward/Gift in nature

Lending Crowdfunding

LendingModel
Funders get something equivalent to a bond (periodic reimbursements + interests)

Equity Crowdfunding

EquityModel
Funders are investors, they become shareholders.

 
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Is Crowdfunding really legal?

Donation/Reward Crowdfunding is legal in almost any country in the world. A platform such as Indiegogo claims crowdfunders & crowdfundee from 200 countries.
On the other hand Lending and Equity models are much more regulated.
Lending crowdfunding is popular in few countries including the US and the UK.
Equity Crowdfunding, the most promising model, is widely legalized in Europe but not yet in North America (Canada & USA).

I’m not sure Crowdfunding is really good for me…

Crowdfunding is a revolution for doers, artists and entrepreneurs. If you have a story to tell and a dream to realize so crowdfunding is good for you. However if you are afraid to share your idea, reluctant to be active on social networks or not ready to work full time on your campaign so maybe Crowdfunding is not good for you.

Is Crowdfunding only about raising money?

You get a very important point. Crowdfunding is much more than only raising money.
In fact we think that it’s half a financial tool, half a marketing tool. If not more! Beyond fundraising it allows you to 1) get proof of concept 2) create a community of evangelists 3) obtain free publicity and press 4) receive valuable feedbacks 5) find potential partners, … and many more.

ForbesArticle
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There are so many platforms, what is the best one for me?

Here is a list of more than 400 platforms worldwide. It could ba a pain to choose one.
According to empirical studies, geographical localization is an important factor. So choose a platform that is popular in your location. But you have also to compare fees, platform specialties, etc.

How much money could I expect?

Unofficial statistics about Kickstarter reveals that average successful campaigns have raised 7,800$ (June 2012).
Set the funding goal too low, you may not raise enough to be successful. Set it too high, and you might not attract enough ‘pledges’ from donors to meet the goal.

UntoldKickStats
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Why would I need a Crowfunding consultant like Seeding Factory?

To be honest, you might not need help from a crowdfunding consultant. It is even criticize by some people saying crowdfunding must be a DIY adventure.
But we want to remind you one figure: failing rate is above 50%, on any platforms!
You have to be aware that running a campaign is a full time activity, starting 1 month before the campaign, ending 1 month after it.
Do you think you have the material to produce a good quality video? Do you have experience to build a powerful social presence? Are you skilled in Public Relationships?
Seeding Factory offers you different options. We can help you only on some weak points or take care of your campaign as a whole.

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I wonder if a video is really essential?

Campaigns with video pitch have 100% more chances to get funded than those without. This figure says it all…

What’s the ideal timeframe?

Too long campaign won’t allow you to get more funds. At Seeding Factory we prefer campaigns from 20 to 40 days.