Raising Capital Through Your Crowd – 4 Examples and Tips on Running a Successful Crowdfunding


The difficulty of getting your loan application approved by the bank has forced most business owners to take more unconventional approaches to gaining access to capital. Thus, crowdfunding is born.

Startups and established business owners have enjoyed success from the number of people backing their concepts on different online crowdfunding platforms. However, this does not mean that everybody should pitch their proposals and expect to receive a huge amount in return. There are a couple of things that you need to make sure for your creative idea to generate funds and be turned into reality.

Gauge interest level

Pebble: E-Paper Watch is currently the most successful campaign launched at Kickstarter. Pebble Technology wanted to raise money for developing its wrist watch that can be synced with your iPod and Android smartphones and customized with apps. The target amount to be raised was set at $100,000US, but the campaign managed to raise the amount two hours after the video was released. Upon watching the video, you’d understand how innovative and useful the product is at its very core.

After 38 days upon its launched, the crowdfunded campaign amassed over $10US million.

Is your idea really, really interesting? A proposal that lacks imagination and refuses to break new ground will not hit its target amount. Your idea must capture the attention of your target audience in any way possible. Be weird , useful (BugASalt), fun (Griz Coat), or a combination of these with your idea.

Set reasonable rewards

Amanda Palmer, front-woman of the Dresden Dolls, was dropped by a major label. To celebrate her freedom, she launched a Kickstarter campaign asking for support to create an album with the Grand Theft Orchestra. The campaign raised more than a million dollar for the release of the critically acclaimed “Theater Is Evil.”

Palmer prepared for a tour in support of the album. Looking for musicians to back her up, Palmer posted an ad on her blog looking for volunteers playing the horns and strings. Unlike most musicians hired to play as opening acts, the volunteers would not be paid for their performance. Instead, Palmer will “feed you beer, hug/high-five you up and down (pick your poison), give you merch, and thank you mightily.”

Fellow musicians voiced out their displeasure over Palmer’s choice to not pay the volunteers. They believed Palmer has failed as an artist because she relied too much on her audience to create her work. Although Palmer provided a constructive response to her decision, she ultimately chose to pay the volunteers.

How much are you willing to give? Palmer’s “kerfuffle” occurred after her campaign was done, but it did show how any one can get overboard with using an audience to support a project. Getting people willing to help with your campaign is one thing, but make sure to give out a competitive reward. This not only lets you increase interest over your project, but also give back what’s fit to your lenders.

Create a story

Nikola Tesla‘s life has been reduced to his contributions to the modern alternating current (AC) electric supply system.  He spent his final years at his laboratory known as Wardenclyffe in Shoreham, New York building a tower that would provide free wireless energy to everyone.

In 2012, the laboratory and tower went up for sale. A non-profit organization was willing to buy the property for $850,000US and turn it into the Nikola Tesla Museum. But there is another person bidding for the property, who hopes to turn it into a retail establishment.

The nonprofit organization must another $850,000US to buy back the laboratory and tower and preserve Tesla’s legacy.

Matthew Inman from The Oatmeal, known for his adulation for Tesla, has created a campaign to raise the necessary amount for the organization. To support his posting on IndieGoGo, he wrote a compelling case that praised Tesla’s contributions to engineering that have influenced how we live  life today. In true Oatmeal fashion, Inman manages to slip in some jabs at Edison’s integrity.

In nine days, Inman was able to collect $10US million from lenders, thus successfully getting back the Wardenclyffe in honor of Tesla’s memory.

IndieGoGo, The Oatmeal, and Nikola Tesla(Source)

How compelling can you make your narrative for your business? Inman weaved a narrative that makes it difficult to deny Tesla’s greatness. Tesla has a relatively obscure history and Inman arranged and compiled the scientist’s life story into an accessible pitch to get the attention of lenders. The comic may have been done in jest, especially at the expense of Thomas Edison, but it did get the point across very clearly.

Make a difference

1:Face Watch ran their campaign at Indiegogo. Their sleek wrist bands don’t offer the functions of Pebble’s E-Paper Watch, but each purchase of  the watch has a social impact. The watches are sold in six different colors, each representing a different charity. For instance, the white watch represents hunger – for every purchase of the white watch, the company feeds 16 malnourished children in Africa through the One Day’s Wage charity.

Are you making the world a better place with your campaign? 1:Face Watch’s offer is lucrative because they made purchasing the watch a good thing. You not only reward yourself with a cool-looking watch, but also help the less fortunate in the process.

To recap:

  • Make your crowdfunded campaign interesting and useful so people will lend their money.
  • Justify the amount of donation people give with a fair reward that you can deliver to them.
  • Create a compelling story behind the campaign so people will become more invested to see your project succeed.
  • Launch a project because you feel people really need this.

What other things do you think people must know before they begin crowdfunding their projects? Share your ideas by commenting below!


1 Comment on "Raising Capital Through Your Crowd – 4 Examples and Tips on Running a Successful Crowdfunding"

  1. Jе ѵais finir de regarder tout ça plus tard

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