When it comes to Crowdfunding, there are different options to choose when running a campaign. If you are anticipating a Crowdfunding campaign for your corporation, non-profit, or startup, then what is the type of campaign you should be running?
To help determine the right campaign to run, you need to know the difference between each of the methods. Below are the different methods explained:
Rewards
This method allows the campaign to offer a particular reward for backers that donate a certain amount to the campaign. As an example, if a backer donates $100, then they receive a free t-shirt and the product that is being funded. If the goal of the campaign is to generate pre-sales for an unreleased product or test the product in a real-world environment than this is would be the ideal funding method.
Some campaigns even try to sell their product in bulk for those who would like a better deal. In addition, there are platforms that allow for early bird rewards as well. This would typically be the product, service or invention at a price much less than what it will be later in the campaign, and in retail.
Donations
This method is not offering any particular product for an incentive in return, rather it is asking to receive money for a cause or idea. For charities and non-profit organizations, this form of funding may not be a new concept, but it is likely the type of method to use. Many non-profits decide to take the donations based funding method, as there is little to offer for rewards, or the funding and audience are not yet big enough to afford any rewards.
Equity
Much like traditional funding methods, investors have the opportunity to own a share of the company via a Crowdfunding campaign. Instead of searching for investors like Venture Capitalists, or government funding, you can let the crowd earn shares into the company. Although investors can invest in public companies on the market, this method is for those who want to invest in companies that do not have any traction yet. This is designed for companies that are just starting out in the beginning stages of a startup.
If you are a startup without a physical product, but instead offering a service, then this funding method may be the right solution. As your product or service may not apply to the Rewards and Donations based Crowdfunding campaigns.
How to choose
Decisions may vary depending on the purpose. In general, if you are offering a new product that could be considered an invention, then a rewards-based campaign is would typically be used. You can discover all of these types of campaigns on platforms like Kickstarter and Indiegogo. Furthermore, running donations based campaign could be just as beneficial. For example, if your invention is in early stages, and you don’t have a prototype or anything else to offer, you can take donations if people respect the idea enough to donate.
If you are a non-profit, charity, school, or individual then sticking with the donations based campaign might be the best bet. These are a few of the organizations that will typically receive funding from backers or other organizations without having to offer anything physical in return. If your situation is similar, then why not create a donations based campaign?
Lastly, if you are an organization that is simply looking to raise capital, the equity based campaign is likely suited for you. It is a great way to get noticed in your market, and typically cheap to run a campaign.
For tips and advice, check out these blog articles, or the Helios community. To access a suite of Crowdfunding products, discover what Thrinacia has to offer.