Content
- Crowdfunding
- Creating a successful crowdfunding campaign
Process:
Today was the fourth lesson of the technopreneurship course by Mr Chia. We learnt about the mechanics of crowdfunding and how to successfully make use of crowdfunding.
What is crowdfunding?
Crowdfunding is the practice of funding a project or venture by raising monetary contributions from a large number of people, today often performed via internet-mediated registries, but the concept can also be executed through mail-order subscriptions, benefit events, and other methods.
After creating a business model design and doing market research, the next step is to gain financial support to implement and kickstart the business. One such avenue is crowdfunding. There are two kinds of crowdfunding, rewards crowdfunding and equity crowdfunding:
Rewards crowdfunding:
Entrepreneurs pre-sell a product or service to launch a business concept without incurring debt or sacrificing equity/shares.
Equity crowdfunding:
The backer receives shares of a company in exchange for the money pledged.
Mr Chia also introduced us to several different crowdfunding websites, On these sides, entrepreneurs looking for funding create presentations to pre-sell their goods, and angel investors go onto the sites to look at and possibly contribute to the projects. The investors will get different rewards based on their amount of financial contribution. A few examples of popular crowdfunding sites are Kickstarter and Indigogo. Singapore also has its own crowdfunding platform, run by Starhub, called Crowdtivate.
Creating a successful crowdfunding campaign:
A crowdfunding campaign should contain a few components.
- Telling a story
- Building reward
- Promotion
It is also a good idea to launch a pre-campaign or to build an audience on social media before the actual campaign. This allows a larger audience to be aware of the project before it goes onto the crowdfunding website and also allows your audience to remain updated on your progress. This can increase the amount of funding that you can get during the actual campaign.
It is also important to take care of the legal matters and taxes. Revenue and donations from the crowdfunding campaign is taxable.
Entrepreneurs should do research and pick a suitable crowdfunding platform for their needs. Some platforms like Tubestart specialise in certain start-ups and hence have a more focused audience and investors.
Many entrepreneurs also make a mistake of setting the wrong funding goal, ending in failure. It is important to remember the costs of fulfilling rewards, legal costs, marketing costs, platform fees, and to set a cushion.
Reflection:
I have previously been exposed to crowdfunding before, but not in this level of depth. I feel that crowdfunding is a very good community to support entrepreneurs and encourage innovation in the world. I will definitely be visiting crowdfunding sites frequently from now on as it allows me to keep up-to-date with the latest inventions and innovations. I can spot different and unique business models there, learn how to sell products more convincingly and understand the products and the way the people think to innovate and create them.
Personal Development:
I will be researching on my own the psychology and design behind creating convincing presentations. This is already applicable now as we frequently have projects or competitions that require us to present. Being an aspiring engineer, it might also be useful if I manage to create a product or start-up in the future. I will also research on how to best harness the power and potential of social media for marketing.
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