Crowdfunding has turned into such a popular way to raise money that it can now be broken into different categories. Donation-based crowdfunding is gaining popularity, as it allows entrepreneurs to be creative with bringing in money without having to give a part of the future earnings. Instead, using rewards or giving backers prestige is what motivates them.
One company that knows all about this trend is none other than InventureX. Joe Parker, the senior marketing coordinator at the company, works with people every single day looking to have successful crowdfunding. He answered a few questions for us on the topic, and how people can get started for the first time.
Why do you think crowdfunding has turned into such a popular method?
A lot of people are not intimidated by how crowdfunding, in general, is set up. Instead of having to count on one or two investors, the focus is more on getting a bunch of backers to donate a smaller amount of money.
It’s also great marketing for people who are trying to get something new out there. Every time someone backs the project, it helps with the marketing as well. Some of the top crowdfunding campaigns will end up going viral because of this.
What’s the first piece of advice you give anyone considering donation-based crowdfunding?
Put in the time and effort before so that the campaign goes as smoothly as possible. There are always going to be things that pop up during the campaign but being prepared for a lot can increase the chances of success.
Too many people think that a crowdfunding campaign can be thrown together in a short amount of time. It can take weeks or even months of planning, making sure that everything is set up for success to follow.
How important is a good reward system for backers?
Taking the time to provide valuable rewards for backers will help out any crowdfunding campaign tremendously. It’s not going to be the main deciding factor for some backers, but it still is something many consider.
No one wants to donate something that doesn’t seem like it will be that exciting in the future. So many people face the challenge of putting money towards something, and then not feeling like they got what they deserved. It doesn’t have to be much, as long as it’s creative.
Is it fine to switch up the reward system?
It is important to be one step ahead of the trends that are redefining the future of crowdfunding in order to be on the right track. Try to stay away from switching up the rewards system too much, simply because it can cause jealousy. If a person starts with great rewards, stick with it as long as possible. Never make the rewards even more enticing, because that’s going to frustrate those early backers who feel like they are under-appreciated.
Are we reaching the peak of donation-based crowdfunding?
I still think there is room to grow when it comes to donation-based crowdfunding. It’s more competitive, but that means the best campaigns can shine. It’s more important than ever to put time and effort into something like this.