Crowdfunding: what is it? 4 types of funding for your project

What is crowdfunding? Crowdfunding is a method in which a large number of people pool money for a specific project or idea. It is all based on crowdsourcing. Instead of receiving large sums of money from a single source, the project initiator collects small contributions from many people. This financial support can be used for creative projects, start-ups, charitable initiatives, personal projects and much more. Crowdfunding platforms such as Kickstarter play a central role in this by facilitating interaction between the backers and the project creators.

Who is crowdfunding suitable for?

1. Creative minds
2. Start-ups and entrepreneurs
3. Non-profit organizations
4. Individuals / influencers

Creative minds

Artists, musicians, filmmakers and writers often use crowdfunding to finance their creative projects. This enables them to realize their works without having to rely solely on the support of publishers or studios.

Start-ups and entrepreneurs

Founders of new companies can use crowdfunding to raise start-up capital. This is particularly helpful if they have difficulty finding conventional investors.

Non-profit organizations

Non-profit organizations can use crowdfunding to raise money for charitable causes or social projects. It enables them to finance their missions and spread their message.

Individuals / influencers

Self-employed people or those with personal projects, such as travel, education or medical treatments, can use crowdfunding to get financial support from family, friends or even strangers.

How is crowdfunding financed? 4 types

Crowdfunding usually works on an online platform where the project creator presents their project and collects money from interested supporters. The supporters can contribute amounts of money of their choice. There are various crowdfunding models:

1. Reward-based crowdfunding: Product
2. Equity crowdfunding: Shares
3. Loan-based crowdfunding: Repayment
4. Donation-based crowdfunding: Nothing

Reward-based crowdfunding: Product

Supporters often receive a reward or product in return for their contributions. For example, they might receive an author’s finished book or a copy of a movie.

Equity crowdfunding: Shares

Investors receive shares in the company or project instead of rewards. This is often used by start-ups to raise investment.

Loan-based crowdfunding: Repayment

Supporters grant the project creator a loan that is repaid. This is similar to a loan.

Donation-based crowdfunding: Nothing

These are pure donations for which the supporters do not expect any material consideration.

Can you earn money with crowdfunding?

Crowdfunding is primarily a method of funding projects or ideas, and the results can vary greatly. Some projects raise substantial sums, while others may only receive limited support. Most people use crowdfunding to realize their ventures and do not use the financial support as a source of income. However, there are also cases where successful crowdfunding campaigns have led to long-term business opportunities. Keep in mind that success in crowdfunding depends on various factors, including the quality of the project, the presentation on the platform and the ability to attract supporters.

Kickstart campaign: examples of crowdfunding

If you want to start a Kickstarter campaign, it’s helpful to learn from successful examples. Here are some best practices and inspiring examples of campaigns that have achieved great results. You want cases? Here are 7 practical examples! For example: Jeremy Fragrance, who not only established his brand with his Kickstarter campaign for “Office For Men” perfume, but also raised 31 times more than expected. Jeremy Fragrance asked the community for €25,000.

In the end, it amounted to 780,149 euros from 5,955 supporters!

This impressively illustrates the potential of a Kickstarter campaign for influencers and budding brands.

• 7 examples: Kickstart campaign

And then…? Online marketing!

Once you have successfully financed and implemented your crowdfunding project, the next step is to make it known to a wider audience and achieve the desired results. This is where online marketing comes into play! Through targeted online marketing strategies such as social media advertising, search engine optimization (SEO), content marketing and email marketing, you can effectively promote your project or company, increase visibility and attract customers or supporters. Online marketing offers the opportunity to address specific target groups and further maximize the success of your crowdfunding project.

• Social media advertising
• Search engine optimization (SEO)
• Content Marketing
• E-mail marketing