How to organise a crowdfunding campaign

BY BUHLE NDWENI | May 12, 2014
Does your business need a capital injection? Are the banks unwilling to take a risk on your idea? You could try a crowdfunding campaign. Here’s how to go about it

Obtaining a capital injection, especially for a startup, is difficult. But there are ways to get around this and convince potential investors to take you seriously. One is called crowdfunding.

Screen-Shot-2014-05-12-at-3.55.15-PM-660x562

Crowdfunding campaigns help entrepreneurs working for both non-profit and/or for-profit enterprises access funding from willing investors.

Investment analyst at Knife Capital, Vasilios Kottas Bonel, says crowd funding solves funding issues faced by startup companies.

“In particular, this problem is faced by idea-stage companies that would rarely qualify for investment from angel investors or venture capitalists due to an unproven concept and lack of traction,” says Bonel, adding that there are three crowdfunding models currently used around the world.

These are donations (for non-profit organisations), and lending, and investment (for profit-making businesses).

CROWDFUNDING FOR NON-PROFIT ORGANISATIONS
The non-profit crowdfunding model is a very straightforward concept that does not differentiate itself much from charitable donations to a cause, says Bonel.

“No ownership is exchanged for funds and theoretically, the crowd funders simply hope to see the cause that they’re funding succeed.”

FOR-PROFIT CROWDFUNDING
There are a various ways for-profit organisations can be funded. “Startups or entrepreneurs with an idea can source funding for the development of their product only, or for their business as a whole,” says Bonel.

“Crowdfunders who help fund the development of products generally do so because they want to see this product hit the market. This is generally motivated by the fact that there is no other comparable product in the market, from the funders’ perspective.”

He says they believe this to be a viable first step for any startup.

“The issue with for-profit crowdfunding arises when funds are exchanged for equity in the transaction. The startup can raise money from sometimes thousands of involved parties who now have to be allocated an equity portion (ownership in the company).”

Crowdfunders who help fund the development of products generally do so because they want to see this product hit the market… [because] there is no other comparable product in the market, from the funders’ perspective

Bonel says startups need more than a cash injection to succeed. A credible investor would need to leverage networks, add strategic value and work closely with the company to maximise its growth. This is something that cannot be done by a crowdfunding model that has a lot of equity partners, since they would not be incentivised enough.

PRACTICAL TIPS ON STARTING A CROWDFUNDING CAMPAIGN:
1. Speak to those who’ve walked the road before. Bonel advises entrepreneurs to consult others who have succeeded at raising capital through crowdfunding. read more on
http://www.destinyconnect.com/2014/05/12/how-to-organise-a-crowdfunding-campaign/

Tags: , , , ,

HEADLINE NEWS

This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news [...]

ForbesThe Celebrity Who Loves Crowdfunding: Lala Anthony Hosts New Series Featuring Female EntrepreneursForbesIt's been proven that funders clicking through projects on crowdfunding sites seem to prefer early-stage, female-led ventures, and one celebrity is looking to highlight t [...]

Crowdfunding flower power in WalesPositive.NewsResidents in north Wales decided to act to help a local patch of land flourish. They hope their successful crowdfunding campaign will help them continue restoring this “beautiful meadow”. Locals launched the Gweld y ddôl – Seeing the mead [...]

Crain's Cleveland BusinessCrowdfunding can ease teachers' 'burden'Crain's Cleveland BusinessBooster seats. Reading materials. A bass clarinet. What do these things have in common? At the start of October, teachers in Ohio were trying to raise money to buy all [...]

PolygonStar Citizen's celebrity-clad Squadron 42 trailer boosts crowdfunding by over $1mKitGuruCloud Imperium Games pushed its Alpha 3.3 into Star Citizen's public test servers last week, alongside debuting the most complete trailer for its celebrity-filled Squadron 42 singl [...]

UK FundraisingJustGiving removes platform fees for crowdfunding, major incident & disaster campaignsUK FundraisingJustGiving has today (15 October) announced key changes to its fee structure that will see platform fees no longer charged for its Crowdfunding product, or for major i [...]

BusinessCloudRide-hailing app backed by West Brom FC star is crowdfundingBusinessCloudA ride-hailing app which boasts 1,500 drivers and is backed by West Brom striker has launched a crowdfunding round as it gears up to scale. Arrive was set up to solve a number of problems which it sa [...]

Crowdfunding Global Market Trends, Growth, Opportunities, Top Key Players and Forecast to 2025Digital JournalThis report studies the Crowdfunding market status and outlook of Global and major regions, from angles of players, countries, product types and end industries; this report ana [...]

AdAge.comLego, Coke and other big brands are turning to crowdfunding for R&DAdAge.comEnter Indiegogo, a crowdfunding service that is luring more business from large corporations, which are using the platform to test ideas. New interest from the likes of Coca-Cola and Tyson provide [...]

Money MagazineCrowdfunding Campaign to Unseat Susan Collins in 2020 Surges Past $3 MillionMoney MagazineA crowdfunding campaign has raised more than $3 million to unseat Sen. Susan Collins in 2020 after she voted on Saturday to confirm Brett Kavanaugh to the Supreme Court. Although th [...]

CFB Finance

Marketwired

  • Crowdfunding
  • Crowdfund
  • Peer to Peer Lending
  • FinTech
  • Reg A+
  • Reg CF
  • Crowdfunding USA

Press Release

Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |