If you are new to the concept of Crowdfunding, you may have a multitude of different questions. This article is designed to help answer the most commonly asked questions when it comes to Crowdfunding.
What is Crowdfunding, and how does it work?
In general, Crowdfunding is a way to raise funds, whether it be for a business, charity, non-profit or other by collecting small donations from a large group of people. This is not a new concept for funding, as people have been using this method for centuries. It is more common today to use online by going on to Crowdfunding websites/platforms.
What’s a Crowdfunding platform, campaign, and backer?
Crowdfunding platform: A Crowdfunding platform is a website that people use to host their Crowdfunding campaigns. There are many different platforms available, and some specialize in particular niches.
Crowdfunding campaign: A Crowdfunding campaign, is the practice of Crowdfunding, or raising money by taking small donations from a large crowd of people.
Backer: A backer is someone who donates or pledges to a Crowdfunding campaign.
What is the best Crowdfunding platform?
There is no “one size fits all” when it comes to Crowdfunding platforms. There is, however, Crowdfunding platforms created for the use of the general public. The idea is that the Crowdfunding platform could also help the campaigns on the platform produce more backers by generating a high volume of site traffic. Many unsuccessful Crowdfunding campaigns rely on the Crowdfunding platform to generate the majority of the donations. This is why there is a high percentage of unsuccessful Crowdfunding campaigns. The most successful Crowdfunding campaigns utilize a prelaunch campaign and understand the key marketing strategies that it takes to run a successful Crowdfunding campaign.
Do I have to be a legal entity to post and raise funds?
No, you do not have to be a legal entity to post and raise funds. There are many personal Crowdfunding campaigns created on general charity Crowdfunding platforms.
Are there any fees?
The fees differ depending on the platform. Most platforms take a transaction fee on each donation to the platform. These transaction fees can range from 3% – 15% depending on the particular platform that you are using.
Can I run multiple campaigns, on different platforms?
You could technically run campaigns on multiple platforms, but this is a terrible strategy. First, you are relying on the platform to generate donations for you, which is not a reliable strategy. The only way that one could gain donations from the platform, is if you are featured on the front page of the website. If the Crowdfunding campaign turns out to be gaining a high percentage of the campaign funding goal, only then will your campaign be featured on the website. If you host the same campaign on multiple platforms, you lose out on reaping the benefits of the platform as all of the marketing for the campaign must be split.
What are AoN and KiA campaigns?
AoN (All or Nothing): The campaign creator chooses the funding goal, and if the funding goal is not met, in the allotted amount of time, then the backers get their money back, and the campaign creator does not receive any of the funds.
KiA (Keep it All): The campaign creator gets to keep all of the funding whether the campaign funding goal is met or not.
How do I get more backers?
This age-old question can be simply answered by a great marketing strategy. As mentioned above, the platform is not going to be generating more backers to your campaign unless you have already generated a good amount of the funding goal. Make sure you conduct research before launching your campaign to formulate a successful marketing strategy.