Crowdfunding - sell or promote ?!

At the beginning of the 2012 of the year, only a few people knew about a similar phenomenon as crowdfunding in Russia. And today, the number of participants involved in the process is in the millions. The emergence of new platforms for business development, pushed some to create interesting start-up projects, while others allowed them to expand their presence in the market and increase capital. How it works and what will help to gain the trust of “investors” is in our material.

Crowdfunding is public funding (from English crowd funding, crowd - “crowd”, funding - “funding”), the cooperation of people who join forces to implement a specific project.

Crowdfunding arose in the 2009 year and in five years it turned from a rather dubious idea into a serious business with millions of sales. The dynamics are impressive: on average, growth was 63% per year, and last year, crowdfunding doubled its pace altogether, adding 124% to its weight. The total amount collected at crowdfunding venues is 1 billion US dollars, with most of this amount collected over the past 12 months. In total, over 6,5 million people participated in various projects around the world. And more than 30%, all participants returned to crowdfunding venues again to make their contribution to the new project.

86% of the revenue comes from successful projects. According to statistics, thanks to public investment, 333 restaurants, 53 cinemas and 18 libraries were opened, 7 films were shot (two of them were nominated for an Oscar). And even the 1 satellite was launched into space. Record-holder for fundraising - a project of “smart watches” for a smartphone (more than 10 million collected).

In my own way

In Russia, the history of crowdfunding began with the project of musician Max Lakmus, who was looking for alternative ways to monetize his work. Recording new songs, writing a book, starting filming a movie ... today in our country various creative projects are most involved in crowdfunding. Gradually, interesting projects related to the development of computer games begin to appear on the sites, and small business is also connecting to the process.

Of the 43 million rubles collected during the year and a half of the existence of the domestic Planeta.ru platform, more than half account for music projects. At the beginning of the site, they made up 90% of the content. “We started to introduce the idea of ​​crowdfunding precisely with music, as musicians have a big credit of trust, a loyal audience is the perfect main“ product ”- their creativity,” comments the PR director of the Planeta.ru portal. Creating the project, they took over the experience of their Western colleagues (kickstarter.com, the most successful and well-known site) and brought a lot of new things into it: the platform has additional development tools, such as Internet TV, special projects, and a trading platform.

Thanks a lot ?!

How does crowdfunding work? At first glance, everything is very simple. The author announces the project and indicates the amount of money required for its implementation, which the backers (sponsors) can transfer to him over a certain period of time. If after this period the required amount is not collected, the money will be returned to the “donors”.

This is a general scheme, but there are various options for the interaction of the backer and the author of the project. By the way, according to experts, the correct choice of the “thanks” option largely determines the success of the project itself.

Donation crowdfunding. In this case, the backers really completely free of charge give money to other people for their needs and finance the activities of public organizations.

Rewards crowdfunding. As the name implies, in this case, a becker is due a reward. This is not always money, most often it is a certain product created thanks to a crowdfunding campaign. For example, you sponsor the organization of a small production for the production of honey or organic cosmetics. The organizers promise you to send you a jar of product.

Debt Crowdfunding, or Peer-To-Peer Lending. This is the so-called debt crowdfunding, people give money for projects at interest. In America, this kind of crowdfunding is gaining wildly popular and experts predict a great future for it, believing that by the 2016 year it will grow into the 20 billionth industry. Unfortunately, in Russia there are no such platforms yet.

Without mistakes

We mentioned crowdfunding in an article about a young entrepreneur who wanted to revive the Two Balls shoe brand. Unfortunately, he was not able to collect enough money for this project to implement the idea. Crowdfunding experts are sure that the success of any undertaking lies in the details - in well-thought-out rates, gradation of rewards, a bonus system for backers.

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Four common mistakes newcomers to crowdfunding make:

1. Crowdfunding is believed to be gratuitous financing. This is fundamentally wrong. Despite the romantic halo that enveloped crowdfunding, it is still a commodity-money relationship. And if you do not have a product - thoughtful and well presented - then hardly anyone will give you money.

2. Get off with the banal "thank you." Of course, an interesting project will attract the attention of beckers who want to donate a certain amount of money without requiring anything in return. However, the system of rewards and “thanks” should be thought out and this expense part should be immediately included in the amount required for the project. When increasing the amount of support, you can’t just pick up synonyms for the word “thank you”. Use "thank you" once, and then, be kind, come up with something more interesting and substantial.

3. Distributing meaningless rewards. The ill-considered remuneration leads to the rejection of the project by the sponsors. Beckers should not have the feeling that you are simply getting rid of “stale” and unnecessary. Ideally, bonuses should be somehow related to the project. For example, Nick Perumov, who raised funds for the publication of his new story for 150 rubles, guaranteed backers to receive an electronic version of the book, and for 250 rubles promised to mention the sponsor in the book and on all the author’s resources. And the LavkaLavka project, which raised money to open a new store, gave back to discounts for their goods and gift sets of products, and for joining the cooperative for the largest lot. By the way, the requested amount in both projects was collected as soon as possible.

The easiest way is to promise sponsors for the maximum contribution - a sample of your product. Your project has as its ultimate goal something. And believe me, I really want to have something to potential sponsors. But it is important not to overestimate the value of the product and not to offer the right to own it for astronomical amounts. It does not make sense to mislead the backers; stay honest with them. Crowdfunding platform organizers emphasize that backers are ready to donate a certain amount for a good project. Often, they receive letters from sponsors who, even in the event of a project failure (the necessary amount of money was not collected within the indicated time frame), ask not to return the money to them, but to give ideas to the authors!

4. The choice of the wrong system of "deposits". More precisely, an incorrect gradation, that is, a step. What amount will be minimum, which - maximum? What are the intermediate rates? It is important to remember that it is easier for people to part with small amounts. Having declared the minimum bid in 100 rubles, it is important then to maintain the step in 100 - 200 rubles, and not to declare 1000 or 2000! Raising the bar, you risk losing people who would gladly donate 500 rubles to you, but you don’t have such a bet, and it’s psychologically more difficult to part with a thousand of them. On the other hand, forgetting about small sponsors means dooming yourself to failure.

Statistics of Russian backers on the example of the Planeta.ru site

270 thousand registered users regularly participate in money

30 moderation daily

Audience - 46% women, 54% men

25 –34 of the year.

User geography:

Russia - 82,7%

Europe - 5,8%

Ukraine - 7%

Belarus - 3%

USA - 1,5%