Crowdfunding Unfolding

by SUSAN SCHREINER on Jun 5, 2014

Crowdfunding is disrupting the relationship between entrepreneurs, the money raising ecosystem and investors. Kickstarter, Indiegogo and other sites are helping innovators to build businesses and leverage funding with more than 200 online crowdfunding platforms in the U.S. alone.

Evidence is mounting that crowdfunding is starting to impinge on the seed turf of angel investors. Venture capitalists (VC) are no longer immune from the effects of crowdfunding, as feal making within a crowd context is leveling the playing field with terms that are more favorable to entrepreneurs. This is especially ture on the East Coast where words like ‘dividends’ and ‘participating preferred terms’ permeate most term sheets. Crowdfunding also increases a company’s potential valuation, and adds competition to a VC round.

Until now, private equity investments have worked against the interests of entrepreneurs, particularly first-timers. Crowdfunding opens a brand new avenue. It’s an increasingly common way for entrepreneurs, new business owners, artists and creators to finance their projects, many in categories where funding might be challenging.

Picture-6-300x202

John Biggs, a tech writer and editor of TechCrunch launched a campaign on Idiegogo for Mytro, his novel written for young adults. “It’s the story of a secret subway that runs underneath the world’s capitals, the kids who discover it, and the strange and dangerous group bent on taking control of it,” Biggs wrote.

“I’ve never taken part in a crowdfunding effort. With your help, we can talk about some of the problems facing publishing today and I hope to write a series of articles about my experience as I go from author to publisher in one fell swoop,” he added.

His approach provides an anatomy of a successful campaign. At first, he set out to raise $10,000 and promised to sign every hardback edition. Once he accomplished this, he raised the goal to $15,000, and then set an $18,000 “stretch goal,” promising investors would get a 3D-printed rail car. If Mytro fundraising efforts reached $20,000, every paperback buyer would receive a 3D-printed Mytro car. Potential investors could learn about the Mytro campaign on his blog, as well as on Facebook and Twitter.

Another crowdfunding success took place at SXSW, where Veronica Mars sprung back to life. It was a triumphant mix of Hollywood and crowdsourcing. Fans of Kristen Bell’s previous TV show, aided by Kickstarter, helped fund a movie version, in conjunction with Warner Bros.

Engaging Investors

Other projects posted on Indiegogo, Kickstarter or community investment fundraising efforts, verge on marketing brilliance. Crowdfunding backers are highly engaged, and are not just warm leads gathered via a landing page. It allows entrepreneurs to directly connect with their supporters and prospects. Once these backers become financially invested, they also become an entrepreneur’s advocates and help to generate buzz, since as an “investor” there is a sense of ownership that is rarely achieved by other marketing tactics.

We’re now also hearing about companies that may not need funding, but are using the Indiegogo and Kickstarter platforms as a marketing tactic to build community and advocacy prior to launching a product or service. It may be a way for even established companies to create a valuable community of early adopters and some extra buzz.

Crowdfunding and other socially engaging platforms are giving innovators and game-changers new opportunities beyond just bootstrapping or VC/angel funding.

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 [...]

ForbesCrowdfunding Do's And Dont's From iFundWomen's Karen CahnForbesDuring our conversation, she was transparent in sharing that her first software company, VProud, failed because she “did everything backwards” and spent too much time trying to perfect the product. “Pe [...]

Crowdfunding For French CastlesNPRYou too can own a French chateau, in part, anyway. Romain Delaume, CEO of Dartagnans, tells NPR's Scott Simon about a crowdfunding effort underway to preserve La Mothe-Chandeniers. SCOTT SIMON, HOST: What if I told you that for about $60, you cou [...]

VentureBeat10 reasons the $1 million crowdfunding cap should be $20 millionVentureBeatIt's been18 months since the final rule of the JOBS Act went into effect, allowing equity crowdfunding. In those 18 months, everything proponents of the rule said would happen (and none of what [...]

The IndependentFrench Chateau bought by 10000 people through crowdfunding schemeThe IndependentIn countries where castles aren't snapped up by The National Trust and immediately furnished with a tearoom and gift shop, other ways must be found to preserve historical buildings. The [...]

Crowdfunding sites help Boulder County residents raise money to pay for treatmentsBoulder Daily CameraHer health insurance, once she reached the $2,000 deductible, covered most of the chemotherapy, but she has been receiving extra treatment at the Helios clinic in Boulder and is parti [...]

CurbedReal estate crowdfunding expands into more niche marketsCurbedTo those unfamiliar with real estate crowdfunding, the Fair-Haired Dumbbell development in Portland may be just the kind of wacky, esoteric project one envisions when imagining what happens when strangers pool funds o [...]

CGTN America (blog)Crowdfunding movement makes its way through MexicoCGTN America (blog)Crowdfunding movement makes its way through Mexico. Americas Now. Click to share on Facebook (Opens in new window) · Click to share on Twitter (Opens in new window) · Click to share on Google+ (Ope [...]

WKRN.comFranklin mother, son warn of crowdfunding dangers after scamWKRN.comFRANKLIN, Tenn. (WKRN) – Thousands of dollars raised through crowdfunding lost, as a family seeks possible legal action against one of their own. Now a Franklin mother warns others of the dangers of crowdfundi [...]

MashableLearn how to get your big idea off the ground with crowdfundingMashableJust to let you know, if you buy something featured here, Mashable might earn an affiliate commission. Instead of fielding requests from your friends to donate to their Kickstarter or Indiegogo campaigns, w [...]

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 |