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How to 'Crowdfund' Your American Dream
Politicians do it, and now more and more people are finding money to start their businesses thanks to small contributions from supporters.
Posted 1/ 23 11 at 9:00 PM | Business Trends, Money, Starting a Business, Taxes & Accounting, Business Products & Services, Financial Services, Inventions & Innovations
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Back in 1992, former and current California Gov. Jerry Brown ran for president against, among others, Bill Clinton. As Clinton emerged as the favorite, endorsements -- and more importantly, money -- started to flow his way. And as a result, the other candidates in the field began to drop out as votes and money dried up.But not Jerry Brown. Brown had hit upon a then-unique fundraising idea in a pre-Internet day that kept his quixotic campaign alive: He created an 800 telephone number and asked people to call in and donate small sums to his campaign. No more than $100. It turned out that his supporters were more than happy to help him if it didn't cost a lot and was easy to do.
He didn't win, but Jerry Brown was one of the first to 'crowdfund' his campaign.
A more recent example from the business world: Filmmaker Kieran Masterton used crowdfunding to fund his startup, raising more than $12,000 in the process. And maybe even better, like Jerry Brown, Masterton did not have to pay people back with cash, since people who donate to crowdfunding projects expect to be repaid in ways other than money.
Pretty nifty, eh?
Crowdfunding is a process whereby people with projects or business ideas ask the crowd to donate to the cause in exchange for some sort of reward. Typically the reward has something to do with the businesses or project. In Masterson's case, he was starting a website that would distribute the work of independent filmmakers, so he asked them for $100 each – in exchange for getting listed on the website. It worked, big time.
Another example: SellaBand.com is a crowdfunding platform which offers bands something it calls "fan funding." Let's say an indie band has a new tour or album it wants to produce and needs funding for the project. The band would list it on the Sellaband website, and in exchange for donations, would "repay" participants with "free downloads... exclusive CDs, T-shirts, free lunches etc."
Not surprisingly, crowdfunding -- an idea that began as a way for various artists to fund their projects, has morphed into a tool for entrepreneurs to fund their own dreams. As Time puts it, "Politicians do it. Charities too. And now for-profit entrepreneurs are tapping the Internet to get small amounts of money from lots and lots of supporters. One part social networking and one part capital accumulation, crowdfunding websites seek to harness the enthusiasm -- and pocket money --o f virtual strangers."
If this makes sense to you and looks like a way for you to get some funding for your own project, here are some sites you will want to check out:
Kickstarter.com. Listing a project on Kickstarter is free, although KickStarter keeps 5 percent of all money raised, as well as a small portion of all credit-card processing fees.
One interesting thing about Kickstarter is that projects must raise 100 percent of their funding goal, or they receive nothing. Here's why that's a good thing: Let's say that you are trying to raise $10,000 to self-publish a book and that you offer credits in the book in exchange for investments at $50 a pop. If you only raise $5,000, it would not be a very good deal for all of those people who gave you $50, since the book would never get published. So it's 100 percent or nothing at Kickstarter.
IndieGoGo. Similar to Kickstarter, IndieGoGo is a "collaborative way to fund ideas." The difference is that it does not does not require 100 percent funding, although if you do not raise the full amount, they charge you 9 percent as opposed to 4 percent.
Here is one last nice benefit about using crowdfunding to fund your dream: Because it gets people interested in your venture early on, those folks become (literally) invested in your success and thus become your cheerleaders.
Starting a business with a built-in audience and getting funding without having to repay it in cash? Sweet.
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Comments (Page 1 of 1)
WOW this sounds like something I need to look into My name is Heather Rose I am 18 years old at 16 I started writing my on songs , I have about 70 songs now and just published my first web site www.theheatherose.com and I need to know how to get people to my web site ( I need some afforadable advise ) I will look into the info in this article- oh and please visit my web site www.theheatherose.com soon !!
Use links. Search engines often base searches on the number of associated links. Add links to other song writers and musicians you respect and emulate. Often, they will reciprocate. Now, I don't think a top band will add your link, but other writers may if they like your music. Find a mentor in the music business also. Good luck.
Great article, but you missed the other big player in the space. RocketHub.com is another great crowd funding site, and they offer a ton of helpful information on how to run a successful project. Check out their sister site, RocketHub.org, for advice on how to present your project, and reach your funding goal.
EM,
Great POST! Very clear and easy to understand.
If the government would keep out of it the banks and financial markets would be DISCIPLINED by FAILURE! Of course, that wouldn't stop the scammers. But as someone once said, "You can only cheat someone who already has larceny in his heart." Problem is, about 98% of all people have larceny in their hearts! Nearly everyone wants something for nothing. And our modern, electronic world has created the means to deliver NOTHING for something! Whether its trading WOWO potents and powers on ebay or buying Farmville dollars at 7-11. But at least in those examples the people know they are buying non-physical (you can't really say non-existent) representations of things that bring pleasure and joy to their life.
Hey! Perhaps that's what the people who bought Heidi's bonds were actually buying! The GREAT FEELING of owning a bond they BELIEVED was skyrocketing in value! In the same way someone paying to be whacked on the head by Benny Hinn FEELS GREAT BELIEVING they've been healed of cancer - up the day day they die!
Now who are we to say they didn't get value for their money?
Sheesh! What a world!
Understanding Derivatives -- A Primer
Heidi is the proprietor of a bar in Detroit.
She realizes that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronize her bar.
To solve this problem, she comes up with a new marketing plan that allows her customers to drink now, but pay later.
Heidi keeps track of the drinks consumed on a ledger (thereby granting the customers' loans).
Word gets around about Heidi's "drink now, pay later" marketing strategy and, as a result, increasing numbers of customers flood into Heidi's bar. Soon she has the largest sales volume for any bar in Detroit.
By providing her customers freedom from immediate payment demands, Heidi gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer, the most consumed beverages.
Consequently, Heidi's gross sales volume increases massively.
A young and dynamic vice-president at the local bank recognizes that these customer debts constitute valuable future assets and increases Heidi's borrowing limit.
He sees no reason for any undue concern, since he has the debts of the unemployed alcoholics as collateral!!!
At the bank's corporate headquarters, expert traders figure a way to make huge commissions, and transform these customer loans into DRINK BONDS.
These "securities" then are bundled and traded on international securities markets.
Naive investors don't really understand that the securities being sold to them as "AAA Secured Bonds" really are debts of unemployed alcoholics. Nevertheless, the bond prices continuously climb!!!, and the securities soon become the hottest-selling items for some of the nation's leading brokerage houses.
One day, even though the bond prices still are climbing, a risk manager at the original local bank decides that the time has come to demand payment on the debts incurred by the drinkers at Heidi's bar. He so informs Heidi.
Heidi then demands payment from her alcoholic patrons, but being unemployed alcoholics they cannot pay back their drinking debts.
Since Heidi cannot fulfill her loan obligations she is forced into bankruptcy. The bar closes and Heidi's 11 employees lose their jobs.
Overnight, DRINK BOND prices drop by 90%.
The collapsed bond asset value destroys the bank's liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the community.
The suppliers of Heidi's bar had granted her generous payment extensions and had invested their firms' pension funds in the BOND securities.
They find they are now faced with having to write off her bad debt and with losing over 90% of the presumed value of the bonds.
Her wine supplier also claims bankruptcy, closing the doors on a family business that had endured for three generations, her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers..
Fortunately though, the bank, the brokerage houses and their respective executives are saved and bailed out by a multibillion dollar no-strings attached cash infusion from the government.
The funds required for this bailout are obtained by new taxes levied on employed, middle-class, nondrinkers who have never been in Heidi's bar.
Now do you understand? THEN WE ALL TURN INTO PIGS EVEN THOUGH YOU DIDNT WANT TOO.
Oh I got the wrong paypal.
It's OrderWTNS@aol.com
Sally, you should get into politics. It sounds like you actually can't make money running a business or you wouldn't be asking for handouts and blaming your finances on your creditors. What choices have you made to be "so far gone financially?" Have you ever been in a restaurant? I'm betting you have. Must be nice. See, eating out and having a car payment and choosing to use credit cards or other forms of money you don't actually have and then asking for more "opm"(other people's money) is a bit of a joke. Good luck with your "God Bless Sally" fundraiser.
Dear Pablo. You're like the rest of the world, are judgemental without all the facts. I am going to be 61 years old next month and don't know if I'll have food to eat. I've been in business all my working life and wanted to retire at age 50 so I could travel and enjoy life. I've been charitable when need be. I am very talented, was an independent lady and rich thru my own work. No one gave me anything. My credit was A1 since I was 16 (not a typo). I am conservative in my spending. To make a long story short, my ex was politically connected, stole $2m from our business and left me bankrupt on paper. A couple of days after Christmas, his girlfriend evicted my daughter and I from my upscale marital home at 1/2 the price because the courts sold it her illegally. My daughter has one more year of college left and we don't have the funds to get her through. I run successful businesses, can make more jobs. I was just dreaming that maybe just once someone would find a generous spot in their hearts and allow me to live once again because I can make a difference. So here's my paypal OrderWTNS@aol.com. Kindly send me a dollar. I am sure you've had plenty or seen plenty of handouts.
Well I have nothing to offer as I have become an unemployed old person that can only look forward to living on the streets soon. The only thing I can offer is a thank you and "God bless you." I have all this talent, but no place to go with it. I can make money running a business, but I'm so far gone financially that the banks wouldn't do anything for me anyhow. So send me a dollar or two to my paypal @ WTNS@aol.com. You will sleep easier knowing that you have helped someone in desperate need to be able to be self sufficient once more.
I would like to be a millionaire. If you can help send me a couple of bucks to my paypal@jhmichael@aol.com. keep in touch, I'll let you know how it goes. Thank you and God Bless.
John Michael, you sound good at putting your hand out and asking for OPM(other people's money). Good luck with your "God Bless John" fundraiser.
Where do we go from here?I run a small Auto Glass buiness in dallas and I am being squeezed out of the market. i can't find a bank to give me a loan or a line of credit.Any Ideas? Tom.
Tom, never operate on credit. Cut expenses until it hurts, close your storefront or cut it down to a tiny shop. Or use your home to store inventory, and find a nicer automotive shop(a friend's preferrably) that will let you use/rent one of their bays to do installs so that customers see you as a brick & mortar location. Advertise on craigslist(free) and put up flyers near the busiest intersections. If you can do installs at the customer's place of business then stress that ability. People love to have work done on their car without having to take it anywhere. Talk to collision centers that sub-out glass work. Windshields are busted on a daily basis. It's a matter of you connecting with them without hemmoraghing money on overhead. And listen to Dave Ramsey on the radio daily. Good luck sir. You're one of the few people on here not asking for handouts.
Am 1 step from homeless--due to the ongoing setbacks and/or delays in securing any work..its been a year now & i'm stunned that nothing has changed as of this week, Am running out of creative ideas to keep above the rising floods of poverty. Soon to move from room now renting, as i can no longer pay rent. I have no idea what to do & articles like this only serve to deliver some awareness to how this all came about..and to what levels it reaches in the end.... Hope this year does not become a fruitless one like last year...
Thanks in advance for your cooperation with the above conditions. I hope you find it useful. It helped me with ocean of knowledge so I really believe you will do much better in the future I appreciate everything you have added to my knowledge base. Thank you for such a nicely written and easily understood explanation of How to 'Crowd fund' Your American Dream history and use.
Regards,
chiropractic marketing
Thank you for such a nicely written and easily understood explanation of How to 'Crowdfund' Your American Dream history and use.Thanks in advance for your cooperation with the above conditions. I hope you find it useful.It helped me with ocean of knowledge so I really believe you will do much better in the future I appreciate everything you have added to my knowledge base .
Regards,
chiropractor