Crowdfunding is a process in which a lot of people raise small amounts of money in order to raise a large amount of money geared towards a particular cause. It is important as it has allowed people with limited money to gain access to finances. Crowdfunding has become an useful tool in the creation of schools, hospitals, and even seeking out money for medical treatment. It is being considered the alternative to health insurance.
Fundraisers in India have been focused on donations based crowdfunding a lot. Donations based crowdfunding is not the only kind of crowdfunding. There are three other major kinds of crowdfunding which are popular the world over. These are: rewards based crowdfunding, equity crowdfunding and debt crowdfunding. However, current SEBI regulations have put a hold on equity crowdfunding in India.
There are different ways to prepare for a crowdfunding project. One great way of doing this is through research. If you are about to start your project, you must know everything that you possibly can about crowdfunding. The internet has a lot of useful material. Here are certain things you should focus on:
- What kind of project are you looking at?
Is your project more suitable for donation crowdfunding or rewards based crowdfunding? This would depend on the situation and aim. If your aim is to raise money for one specific person’s medical treatment, then donations based crowdfunding is suitable for you. This is because you will have to raise a lot of money in a small span of time and hence giving out rewards is difficult. If however, you are to run a long term project like building a school or healthcare centre, rewards based crowdfunding might work better.
- Mental preparation
You have looked up crowdfunding on the internet, you know what your campaign is going to be like. You need to mentally prepare yourself for the work you are about to do. It is not easy to ask for money overcoming ingrained prejudices. Hence, a certain amount of mental preparation is useful.
- Creating a budget
You must know exactly how much money you are going to need. Your budget needs to be planned out first if you are to start crowdfunding. This is because you will need a target amount before you can start a campaign. Make sure that the target amount is perfectly done as this will become more important to you later.
It is important that you tell all the possible campaigners that you will launch a campaign before you actually launch it. The key to a good campaign is to create a hype around your campaign. This is particularly true in case of launching products where you can take some time off to do publicity before actually launching the campaign. In case of emergency campaigns like medical ones, informing everyone who is likely to contribute and all other friends and relatives will be useful in giving your campaign that extra push.
- Do not get the small details wrong.
Many people do not pay attention to smaller things. For example, many people get the rewards in reward crowdfunding wrong. You should know what to gift your contributor and whether it is of any value or not. You should also check through products for glitches and various other problems. Many people forget to thank contributors. This creates a bad crowdfunding culture where the contributor feels they have done a thankless job.
- Form a team
We cannot stress this enough. Crowdfunding is difficult to do alone and hence you need to form a team to have your back. Various things can go wrong during a campaign and you might find yourself unable to deal with it. This is when your team comes to use.