It's not really new. It's been around a bit - certainly, smart, innovative thinkers recognized the value of tapping into your community/network for funds, long before they decided to call it CrowdFunding. (aka crowdsourcing) Think of it as American Idol for small businesses - who loves you enough to vote for you by sending you $$?
Crowdfund your way to success describes it like this: Let’s say you want to fund a sandwich shop. You’d list your business on one of the various crowdfunding sites (see below) and offer to name a sandwich after someone for a month in exchange for, say, $100. Do that 50 times, and you’ve got $5,000. A filmmaker looking to finance his movie might offer a credit at the end in exchange for an investment of, say, $250. One woman in need of a new boat hull for a trip around the world promised investors a postcard from each of her many stops, and even that worked.
Many of us have already done this without thinking twice about it. Recently, the Art as Action group raised funds for their performances using Kickstarter. I've donated to several ideas via Kickstarter. One drawback with that particular program is that you don't get the money unless you raise the full amount asked for. So, if you need $3000, and ask for $3000 and raise $2950... you get nothing. The donations go back to those who made them. <sigh>
A new one on me is Fundly. We heard about this yesterday when at the AAHA conference in Denver. A nice young veterinary student named Danyel Wynn stopped by and asked our advice on how to raise funds to help her get to Africa to spend time volunteering there. She only needs $5000 and the project is well worth funding, but she's just one young woman and doesn't have a lot of family to tap into. So, she set up a Fundly account and connected it to her Facebook page. Hop over and donate $25 if you have time. Really... that's a small number, but, as with most crowdfunding, the small numbers add up over time. This girl only has till the middle of April to meet her goal. We should help her, don't you think?
I've considered this myself. Tap into the people who love me. :-) Raise some money for new website design, to push this blog to the next level, to create a trusted, safe place for people to get the right small business information, relevant to working with women. But, I always pull back. I feel dedicated to supporting myself. And, the sheer number needed can be overwhelming.
And, therein lies the issue, sometimes. Is crowdfunding a good idea or not? Opening yourself up to strangers can be scary. Let's face it - our friends and family will hop on board, at $25 or whatever price they can afford, but you need a hundred or more to make the fundraising worthwhile. So, you need to ask family and friends to share with their networks...and you never know who is going to see your request. Not to mention, when you do this - there's an element of "need" and who wants to appear needy? Not me!
As a last note, some folks shy away because they don't think it's legal. Turns out, it is. The crowdfunding article cited earlier states, "Now maybe you’re wondering whether this is legal. The answer is a qualified yes. Essentially, since a crowdfunding campaign solicits not an investment but rather a payment in exchange for a perk given by the business, the transaction doesn’t really constitute the sale of a “security” for Securities and Exchange Commission purposes. (That said, there is currently an effort to get the SEC to specifically exempt crowdfunding from securities laws. You can learn more about that here.)
Have you ever done this? WOULD you ever do it? If so, under what circumstances?
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