Crowdfunding is a process of involving others to raise money for a project which could be a product creation or a start-up/business and more. It’s hugely beneficial for budding entrepreneurs and banishes the overbearing investments that most of the start-ups’ experience before they have even started and get stuck otherwise.
There are plenty of existing charity, donation, and investment platforms today, but the most commendable are Kickstarter and Indiegogo for their rewards-based crowdfunding where a reward is linked to a project or a cause that you are supporting and you give money in return for it.
Why has Crowdfunding Been So Successful
As we know, these days people shop on e-commerce sites more than they shop at the local stores. So, looking at the advancement and huge expansion of e-commerce, almost everyone has this luxury to buy about anything with a click through their digital devices like Smartphones, Tablets or Laptops.
Now, because consumers have better choices, the consumer–business relationship has been democratized, and hence, small startups with more personal relations are being opted by the customers. People who are the early adopters are actively participating in the success of startups. Along with that, the entrepreneurs are also now able to finance the businesses utilizing the crowdfunding instead.
Crowdfunding for App Entrepreneurs
It’s crucial to understand and opt for a suitable platform. If in case you as an Entrepreneur have made a decision to crowdfund your app so you can increase the chances. There are 3 really different ways to know about crowdfunding eco-system which include equity, donations, and rewards-based crowdfunding that too come with their positive and negative sides. To list a few of these platforms:
Type of Campaigns:
1. Charitable campaigns:
These donation campaigns take a stand to make a difference. A few sites, for example, CrowdRise, GoFundMe, and Razoo, etc. are really strong platforms for the donations that don’t have any obligations from investor or backer allowing people to raise funds to start their projects and make a change.
2. Equity campaigns:
This is an unavoidable funding campaign idea especially for the future growth along with backers getting a share of the business. These Equity platforms such as CircleUp, AngelList, and Crowdfunder, etc. have networks globally and they are integrating investors and entrepreneurs who are in need of finance.
Also, to have the authorized interest and funding chances, Equity crowdfunding efforts need to have a stronger grip and a track record.
3. Rewards-based Crowdfunding:
What happens in case of rewards-based crowdfunding is that the startups “presale” the products so they can finance their product manufacturing. Although a fair amount of Rewards-based crowdfunding sites is there, for example, RocketHub, AppBackr, Quirky, and Tilt exist, etc; the most successful among them are Kickstarter and Indiegogo.
How to Increase Funding
1. Increase perceived value:
In order to convert more customers (once the product is created) and be able to gain more for the business or product, it’s critical to add perceived value. This could be done by the provision of some products like SaaS that are cost-effective to scale and to maintain per-user basis. You can also check out the best ways to earn money online.
SHADOW | Community of Dreamers is one such start-up where the creators raised $82,577 from 3,784 backers by adding a level of exclusivity to the rewards and project.
2. Offer Related Rewards:
This is one more strategy which the crowdfunders use to increase rewards. When your product or brand is yet to become established, it’s not advisable to announce rewards that aren’t relative to your campaign. In order to add value to your reward scheme, add complementary products to help get more funding.
3. Early Beta Access:
Early accessing crowdfunders and backers help software startups with legitimate. One such example is Minuum, Android keyboard which was launched in March 2013 on Indiegogo. It helped consumers save space on their mobile screens. The campaign raised $87,354 with 9,645 backers. Isn’t that great?
4. Leverage an audience:
In order to start a business or launch a product, it’s important for it to appeal to the consumers so that the trust could be established and to add value. This way the pitch becomes easy and the chances of sales will increase.
One way is to get social influencers on board. Then hire them for product or service reviews or testimonials and utilize the same for leveraging consumers.
With this brisk success, there is no doubt that the crowdfunding concept will continue to work. It will ideally help various campaigns work more efficiently. So, covering both the positive and negative sides of app-based crowdfunding, these strategies & concepts could work effectively if used in a proper manner. They will bring success for budding Entrepreneurs.