How Crowdfunding Sites Work
By Joan One
Crowdfunding sites aim at harnessing the enthusiasm and money of virtual strangers while
promising them a cut of the returns. This enables entrepreneurs to tap into the world of the
internet and obtain small amounts of money from many supporters through a system that is partly
social networking and partly the accumulation of capital.
Crowdfunding sites provide your project with the necessary credibility and infrastructure
to successfully harness the financial power of the crowd. A good example of a crowdfunding site is
RocketHub which is currently one of
the largest crowdfunding platforms that enables numerous projects to raise funds and create
awareness through the website.
In most cases, the crowdfunding site will allow you to rally your family, friends and
colleagues, as well as directly sell to your supporters through the site. This will enable
you to fulfill all orders without incurring the start up costs of having your own ecommerce
Project creators are allowed to add images to their profile pages which are normally
free. You may however have to pay a small additional fee to add more images. Other sites employ
crowdsourcing to allow supporters to contribute to the requirements of your open source project
so as to refine it to completion.
At KickStarter, the project creator
will only receive the funding they require once their project reaches or exceeds its funding
goal. And once you do reach your goal, the site will take a commission of 5 percent. This is
a rather good deal considering that the entrepreneur gets to enjoy the available tools to manage
their project, the traffic and reach of the site, as well as getting empowered in the process.
As a supporter, when you choose to back a project creator whose project you like, you are in
some cases buying shares in their endeavor such as at CatWalkGenius. Here, supporters get to
invest in the future sales of the entrepreneur for up to six months.
Sites such as IndieGoGo have a unique
rewards and pre-sales feature. The former enables artists to provide their supporters with
artwork, private concerts as well as signed albums such that they continue to fund the artist's
pursuits in music. The rewards serve as the foundation for the exchange and come in various
levels to enable all supporters to participate in the crowdfunding campaign based on their
financial means. Pre sales enable the project creator to generate interest in their project
even before they start it.
Joan One is a freelance journalist and creative writer who immensely enjoys writing and
researching into any topic under the Sun. She specializes in writing "green" eco-friendly topics
aimed at enabling environmentally conscious readers to find simple ways to reduce their carbon
footprint and help save our planet.