September 22, 2016 9:17 PM EDT Crowdfunded projects have become almost a Hollywood staple these days. There’s always the idea of getting your hands on a million dollars and starting to make money again. But crowdfunding is a different beast altogether. It’s not just for purists like us who are against seed funding; it can also be an excellent way to bring your startup out of startup limbo and into the world of mass production. The JANE series is a crowdfunded project that’s already had its solicited funds, so we’ll be exploring what it means for startups and venture capital in general in this article.
What is Crowdfunding?
Crowdfunding is a method of funding projects that is similar to funding through traditional means. The crowdfunding website allows people to submit different types of projects for funding, including limited-time offers, overwhelming demand projects, and general projects. Crowdfunding projects are made public at the same time as the campaign begins, allowing all the backers to see what the project will cost and take part in the process as a single entity. Kickstarter is the most famous platform for crowdfunding, but there are many other crowdfunding websites, apps, and tools that you can use. Crowdfunding sites can be used by individuals, startups, and emerging businesses alike.
Types of Crowdfunded Projects
There are several types of crowdfunding projects: micro, large, and sustained. Each of these projects are different in their approach, goal, and goals. While the definition of what is “crowdfunded” varies from individual to individual, the general idea is that a small batch of people, most of them with little to no money to spend, are collectively funding a project. The majority of crowdfunding sites employ a mix of crowdfunding models, including crowdfunding via online retailers, crowdfunding via virtual jewelry stores, and crowdfunding via crowdfunding websites. While all of these methods have some benefits, crowdfunding via retailers is the most common way to go.
What are the perks and incentives of funding through crowdfunding?
Depending on the model used, a crowdfunding project can get a variety of different perks. There are several perks that are usually available to backers of all funding levels, including priority access to the company at all stages of development, access to in-depth interviews with the developers and artists behind the project, early access to the final product (including the box art, logo, and song lyrics), a kick-off night where you can network with other backers, and much more. Some campaign leaders also promise rewards for those who back at higher levels. For example, one Kickstarter campaign promises “plus-sized bags for the devs at all levels, exclusive swag, sneak peak at the upcoming game, and more.”
Staying ahead of the curve in terms of technology adoption
One of the benefits of crowdfunding is that it allows users to get their products to the market sooner. By crowdfunding a product, you are essentially taking a stake in it. You are creating a digital asset that will exist as a tangible product once it’s in the marketplace. This means that you’re taking a major step towards turning your spare money into cash and moving forward. Besides the obvious, having a product in the marketplace can also help you stay ahead of the curve in terms of technology adoption. For example, a recent study found that more than 90% of consumers anticipated getting their smartphone free with the purchase of a smartphone app. With a crowdfunding campaign, you are taking that focus back to the customer.
Good quality products versus cool technology
At the end of the day, your money is going to help make the product your customer purchases. You can’t please everyone. In fact, attempting to do so may end up offending some people. Therefore, caution when using crowdfunding campaigns to acquire products that are not your typical or expected customer acquisition approach. Although the products on offer may not be your standard offerings, they are meant to be aspirational. Your product should be appealing to the eye, not the tooth. Consequently, while cool technology may be a fantasy, it doesn’t mean that it’s not available or not available to the public.
Crowdfunding is a great way to get your hands on a million dollars or more for a limited time. You can benefit from the different crowdfunding options and get your product to market earlier. You can also stay ahead of the curve in terms of technology adoption and encourage more businesses to enter the market. As with all forms of crowdfunding, you will have to keep in mind that it’s not just for backers of large projects. It’s also for businesses of all sizes who want to get their products to market as quickly as possible.