How Crowdfunding Works


How Dreams Come True with Crowdfunding

Crowdfunding may not be the thing you think of when deciding to fund your next idea or small business venture. However, recent statistics show that crowdfunding is certainly gaining traction as a legitimate way to fund businesses. Here, we will talk about why you might want to consider crowdfunding for your business. We will also tell you who is behind funding crowdfund projects. Lastly, we will give you examples of success stories. The very next one might be your next big idea.

Why Crowdfunding?

Crowdfunding is the process of forming an idea, getting the idea out there, and having lots of people back it at once through investment. These types of projects are usually funded online. Popular sites like Kickstarter and WeFunder have made crowdfunding possible. The US Small Business Association recognizes these funds, just like venture capital (received through loans or private investors) a legitimate stream of capital. Recent numbers show that from 2011 to 2012, the amount of crowdfunding funds raised nearly doubled. And it is growing more every year. For businesses looking for a way to raise funds, this might be it.

Who’s In on It?

So who might benefit the most from crowdfunding? Mostly, smaller startup and businesses who might not be able to get venture capital funds. This can include nonprofits, educational or social experiments, and ideas for new technologies or products. For the time being, the JOBS Act had made it perfectly legal to raise up to $1 million to support your ideas or business through crowdfunding. For the most part, backers are online. They normally make over $100,000 per year. The target demographic is that of males who are in their early twenties to their mid-thirties. Keep this in mind when designing your funding campaign.

Proof It Works

Many businesses from all over the world have found that crowdfunding actually works. Plenty have had success. Here are just a few select projects from the year 2013:

  • An entirely Emoji translation of Herman Melville’s classic, Moby Dick.
  • A Philadelphia skate park.
  • Classrooms built out of shipping containers were funded.
  • A project was launched and funded to bring rap artists to the country of North Korea.
  • A Kickstarter completely funded a new photography project at the Berlin Wall.
  • The Pebble wristwatch was born and funded.
  • Goldieblox was invented to help inspire budding engineers in the early years of life.