How the Costs of Crowdfunding Have Increased


In the beginning days of crowdfunding, it didn’t take a whole lot to get a ton of cash. It could be as simple as throwing up a quick page about an idea and that would be enough to get the money that was needed. The same can’t be said for the modern crowdfunding campaign. As the expectations of backers have increased, so has the need for a more professional interaction. The costs of crowdfunding have dramatically increased and in some very specific ways.

1. A Prototype is Almost Always Necessary Today.

In the past, products could be proposed without a prototype and backers would contribute millions. With some high profile failures in the last 12-18 months, however, this just isn’t the case any more. Without a working prototype, which may cost thousands to develop up front, backers just aren’t as interested in sending their hard-earned money into another risky project.

2. A Great Video is Worth a Million Words.

Videos are great when they are professionally produced. Basic videos that look like they were taken on a $100 FujiFilm Finepix leave much to be desired. This means companies may be spending upwards of $10k to create the production value that is needed for a solid video. The value of this investment is worth it. Professionally produced videos have a greater opportunity to go viral.

3. PR Can Take a Company Quite Far.

Public relations are something that can’t be overlooked any more. Being able to distribute a crowdfunding campaign to the general public at large, plus the targeted demographics, can have a price tag of $60k per year. It’s an ongoing service that can definitely pay for itself, especially if there are good press contacts that a PR agency holds. Even if a company decides to do everything internally, however, it is still a task that needs to get done.

4. Marketing Can No Longer Be Ignored.

A recent trend in crowdfunding campaigns is to purchase Facebook advertising as a method of reaching out to their demographics. Facebook advertising can be specifically tailored so it is displayed to some very specific groups of people. This gives entrepreneurs a lot of value for their money. Just be careful of the new “crowdfunding SEO” promises that are out there. Black hat SEO is always trouble for a new company getting started.

5. Branding Is Incredibly Important.

Your brand is necessary to your success. It’s what people will remember about your campaign more than anything else. Having logos that communicate specific information and name recognition that comes when a specific industry is mentioned will help to drive traffic to a crowdfunding campaign if backers are interested and have some spare cash to send along. Without branding, a crowdfunding campaign isn’t seen as professional any more.

Although the costs for crowdfunding may have gone up over the years, the chances to raise huge amounts of money have also increased. Just ask Coolest who recently raised more than $13 million. It takes money to make money, so be prepared to spend as you bring a crowdfunding campaign live. If you do, then your chances of success may be greater.