Have you ever had a brilliant idea or project, but lacked the funds to turn it into reality? You're not alone. Crowdfunding might just be the solution you've been seeking! But what exactly is crowdfunding?
Modern online tools revolutionise the scene of fundraising. Bring new dynamism into the world of finance, whether rolling out a new product, backing up a personal project, or assisting a philanthropic cause — crowdfunding can be an easily accessible and effective way to do so. How does it work, and how can it help you realise your dream or business idea? Let us guide you through the world of crowdfunding!
Table of Contents:
- What is Crowdfunding?
- Types of Crowdfunding
- Best Crowdfunding Platforms
- How Crowdfunding Works
- Closing Remarks
What is Crowdfunding?
Crowdfunding is a revolutionary method of raising funds without knocking on the doors of traditional banks or fiduciaries. Instead, it allows you to source small amounts of money from a vast number of people — your "crowd". Utilising the convenience of the internet, crowdfunding platforms give your project a stage to shine.
One of the significant advantages of crowdfunding is that it democratises fundraising. Unlike traditional methods where a single investor calls the shots, crowdfunding allows ordinary individuals to support entrepreneurs, creative professionals, innovators and charities they believe in. It's essentially an ecosystem where entrepreneurship meets social good, without the usual barriers!
In essence, one may define crowdfunding as a way of raising financing through the collective effort of a large number of people, usually via the Internet. It is characterised by its outreach to a large audience and the accumulation of small contributions from many people, so it becomes just great for money growth and support.
This makes crowdfunding one of the most transformative fundraising models out there! But is there only one type of crowdfunding? Absolutely not!
Types of Crowdfunding
Understanding diverse types of crowdfunding lets you make an informed choice suited to your project needs. Different crowdfunding types are narrowed down to models built around donations, subscriptions, rewards, equity, and loans.
Donation-Based
In donation-based crowdfunding, people contribute money to some cause or project without expecting any return on their finances. Campaigns are mostly held over charitable causes, personal emergencies, and community projects. None benefits tangibly; the support is derived from pure goodwill.
Reward-Based
In reward-based crowdfunding, donors give money in exchange for rewards, which could be something as simple as a thank-you note for digital content and early access to products. It might be anything. Such a model finds extensive usage within creative projects, product launches, and entrepreneurship cases.
Subscription-Based
In subscription-based crowdfunding, people pledge continuous financial support to a creator through recurrent payment. This may be combined with rewarding contributors with exclusive fan content. Artists, writers, and podcasters have applied this model — any creative individual who consistently produces such work.
Crowdinvesting
Crowdinvesting involves raising capital from a large number of investors in return for either equity or debt. It uses the collective power of the crowd to fund start-ups, small businesses and innovative projects. Two different types can be distinguished:
- Equity crowdfunding, allows businesses to raise money by offering shares in their company to investors. In return, investors receive equity stakes that allow them to share in the company's profits and growth.
- Debt-based crowdfunding, also known as peer-to-peer (P2P) lending, is where individuals lend money to businesses or other individuals with the expectation that they will be repaid with interest.
Best Crowdfunding Platforms
The place to begin with is choosing the right crowdfunding platform for your revolutionary idea. Tons of different tools online would provide you with better ground. We will present some of the best, applying to different crowdfunding models that we explored in the previous section.
GoFundMe
GoFundMe is an international crowdfunding platform that operates on a donation model. It is characterised by a clear, multilingual interface that has found enthusiasts among both individuals and organisations. The platform has transaction fees of 2.9% + €0.25 for fundraisers by individual and business.
Kickstarter
Kickstarter is one of the most popular platforms that operates on a rewards-based model. It has interesting analytics tools that allow project organisers to have a more accurate view of their backers' activity. Successful campaigns on the platform have to pay a platform fee (5%) and a payment processing fee (3% + €0.20 per pledge).
Patreon
Patreon is a subscription platform designed with content creators in mind. It is a useful solution for artists, influencers and others who want to receive regular support from their audience in exchange for access to exclusive content. Depending on the choice of toolkit, the organiser pays commissions of 8% or 12%.
4fund.com
4fund.com is an international crowdfunding platform that operates as a Licensed Payment Service Provider. It is available in up to 27 languages and combines donations, rewards and subscription models. Depending on their needs, the organisers can personalise their campaign with a rich set of tools.
The platform has all the necessary features such as recurring donations, adding offers and rewards, exclusive materials for donors, and raising money on behalf of the organisation.
Organisers also can analyse their donor activity through tracking links and the integration of specialised Google Analytics and Meta Pixel tools.
And what's the best part? The platform is absolutely free, with no mandatory fees or commissions! Donations can be made using multiple payment methods (e.g. Visa, MasterCard, Google Pay, Apple Pay, iDeal, Bancontact, Sofort, Skrill, ZEN, Revolut, N26 and UnionPay). Withdrawals to the organiser's account are express and can be made at any time!
Is 4fund.com the Ultimate Crowdfunding Platform? Find out for yourself!
Start crowdfunding today!
Start crowdfunding today!
Crowdcube
Crowdcube is an equity crowdfunding leader that enables developing businesses to raise finance by selling shares to a large community of investors. It caters to all types of businesses and enhances the visibility and reach of campaigns through its vast network. The platform offers opportunities for buying equity in promising new start-ups for investors. It gives them access to a secondary market whereby they can buy and sell shares in private companies — thereby giving them liquidity options.
How Crowdfunding Works
The beauty of crowdfunding lies in the general accessibility and ease of mechanism. You ultimately set up the funding page on a platform like 4fund.com; it's your little digital space for telling a story about your project. You share ideas, stories, and goals with potential contributors. Like making a sale on a marketplace where you bargain on an item, you're selling your vision to people who might find it compelling enough to put their money into it.
Tips for Effective Campaign
To use crowdfunding, it is important to understand how it works. As well as getting to know the pricing and rules of your chosen platform, you also need to know how to proceed once you have set up your campaign.
- Your campaign needs a showcase — you need to intrigue the crowd to raise funds. You need to write a genuine, honest, and inspiring description of your project. Attach photos and other materials to help convince people of why they should finance you.
- Social media channels are invaluable — think of them as your internet megaphone. Not only will you attract donations, but you'll build a community that cares about your cause. Because, let's be honest, promoting your campaign is key to its success!
- Keep in touch with your donors — make yourself available to them! People donating to your cause would like to see how the work is going, so show them! Give them updates! Building a good relationship with your donors is the foundation for effective crowdfunding in the future.
- Discover all the tools of your chosen platform — and make use of them! Crowdfunding platforms have different functions that can help your campaign grow. For example, 4fund.com has options to generate QR codes, posters, widgets and several others along these lines that are even more advanced features!
Success Stories
Projects that have been successfully crowdfunded demonstrate the power of crowdfunding. These campaigns often serve as inspiring examples of how community support can drive powerful change and bring diverse visions to life. We want to reassure you that not every campaign needs to be a million-pound project aiming for global change. But all crowdfunding projects must come out from its passionate creators' hearts.
We are delighted to present some of the inspirational success stories:
- Dublin for the ‘Post-pandemic Lungs’ - the 32nd finale of the Great Orchestra of Christmas Charity focused on the treatment of lung disease. The renowned charity raised money around the world through a variety of offline and online methods. Poles in Ireland supported the initiative through a campaign on 4fund.com, which raised €45,742 (228% of the set goal)!
- Diabeł Łańcucki — a historical adventure film set in 18th-century Poland. It was produced with the support of donors on Poland's leading crowdfunding platform, zrzutka.pl (run by the team behind 4fund.com). Initially aiming to raise PLN 100,000, the organisers successfully raised PLN 281,636 (approx. €65,322) from 918 donors!
- Behind the City: Licuti's Bathers — a photo exhibition funded by a successful fundraiser on 4fund.com. Organised by an Italian artist Andrea Petrelli who wanted to pay homage to urban life in San Giovanni Licuti. He was supported by 47 donors and raised €1,407 (of the planned €1,100)!
- Big Wall Expedition — a crowdfunding campaign set up on 4fund.com by brave, passionate people from Romania who want to make an expedition to Karavshin in Kyrgyzstan. They raised their goal of €2000 by telling their fascinating story and offering merchandise to their 23 donors.
- You Also Have A Chance! — a multi-edition Polish football scouting project by Emil Kot (assistant coach at AFC Wimbledon). This non-profit initiative has been co-funded for several years thanks to crowdfunding campaigns on both zrzutka.pl and 4fund.com. You can learn more about this project in an interview with the founder on our blog!
See more success stories!
See more success stories!
Closing Remarks
In summary, crowdfunding is a way of raising money from a large number of people, typically online or through social media platforms. It allows individuals, businesses and charities to present their projects or ideas to the public, who can then choose to support them financially. This can be through donations, subscriptions, investments or pre-purchases of products and services.
As well as providing a way for people to raise funds for their projects, it also allows them to validate their ideas, build a community of supporters and receive feedback from potential customers. In addition, crowdfunding can help market and promote a project and reduce the financial risk of starting a new business. It is a flexible and accessible funding option that has the potential to democratise the investment landscape.
Are you interested in crowdfunding? Check out our blog for more facts and guides!
