What is crowdfunding?
Crowdfunding is way of raising finance by receiving small amounts of money from a large number of people.
What are the different types of crowdfunding?
Basically there are three types of crowdfunding, namely, donation, debt and equity crowdfunding.
- Donation crowdfunding
Here the donors have no expectations in return for having invested money. This is because people invest simply because they believe in the cause. All the returns on investments are considered impalpable, since they are usually in the form of gifts such as free tickets to a show, coupons etc.
- Debt crowdfunding
This model of crowdfunding involves requesting for support and resources from other investors in exchange for interest. This is also called peer-to-peer lending (p2p) or commonly referred to as ‘crowd lending’. This is considered to be the best source of fund raising for startups because the interest rates are comparatively lower than traditional bank loans and is pretty flexible in nature. An investor receives share for their investments, with expectations that the organization or startup that they’re investing in will pay dividends on profit share with a belief that when it develops over a point of time, the investors would sell those shares at a higher rate than they were purchased.
- Equity Funding
In Equity crowdfunding people or the crowd invest in an early stage unlisted company (one that is not listed on a stock market) in exchange for shares in that company. A broad group of investors fund startup companies and small businesses in return for equity. A shareholder has partial ownership of a company and stands to profit should the company do well.
How to ask for crowdfunding?
Earlier, in order to finance your project or event or business, one had to physically approach people. Today the concept of crowdfunding has moved to the online platforms and portals such as websites where an organizer can post details about the event such as, approximate amount of money that would be required, the aim of the event, tentative revenue that the event would generate and so on. They can also use social media, alongside traditional networks of friends, family and colleagues, to raise money.
Apart from these here are some great tips for you to go ahead with crowdfunding for your event.
- Create convincing video for your event
Since you are about to stretch your hands to reach a large number of unknown people, they would definitely need some confidence and a sound understanding about your event and its theme so that they can invest with copious trust. In order to give them a clear understanding about your event, create video that talks for your event and get it viral on YouTube, Facebook and other social media.
- Gifts and offers for your funders
The best way to get funders is to allure them by offering gifts or discounts or coupons. Now that they have tangible offers they will be persuaded to invest in your event. You may give offers that are germane to your event such as free tickets to your event, food coupons at the stalls, a rendezvous with the celebrities etc. This would act as a great impetus for the investors.
- Keep the investors engaged! Keep constant communication
Give constant updates about your fundraising campaign to your investors. Give them an insight to your progress, create polls, ask for feedbacks and keep them engaged so as to not lose out the trust of anyone. Investors are the key to the success of your crowdfunded event. You do not want them to get isolated for any reason.
- Convert investors into attendees
Now that you have a connection with so many people who have invested in your event, as a smart organizer invite the investors to attend your events thereby increasing the headcount of your event. Funders will also have an opportunity to meet people who are interested in the theme of your event and it is possible that they would fund your upcoming events.
- Request Funders to go Social
You could any day request your investors to help in popularizing your event through social media, blogs and any form of propaganda. This goes beyond spreading the word. You have a bunch of people who are doing the seamless marketing for your event for free.
What are the two major advantages of crowdfunding?
- You will be able to analyze if there is enough financial support to make you event happen
- You get plenty of media attention, with people buzzing about your event and longing for its success.
- If you have raised the required fund, you have ample monetary resources to conduct a successful event
- If your even is successful your investors are going to become loyal investors.
If your event is really great, your investors are going to become loyal attendees.