If your brain works anything like mine, you’ve constantly got three or four amazing schemes rattling around in there: elaborate plans for exciting projects and smart new products that will change the world. If, unlike me, you’re a half-decent entrepreneur, you’ll probably turn at least a few of these ideas into actual realities.
Sadly, the vast majority of my own dream projects have remained just that, either because a) they were certifiably harebrained to begin with, or b) I don’t have the spare money required to make them work.
In the last few years, I have come to understand that while there’s no remedy for the former problem, there is a potential solution to the latter. It’s called crowdfunding, involves collecting small amounts of lots of other people’s money and has become a viable alternative to more traditional ways of raising capital for a variety of objectives.
I know what you’re thinking: “Isn’t that how that American joker got a bunch of silly people to give him more than US$50,000 to make potato salad a while ago? Why would you consider that sort of thing a sound business proposition?”
While it’s true that some individuals have used crowdfunding for frivolous purposes, the practice has grown in reputability and is now widely used by serious start-up business folks in search of small investors.
By the end of last year, the two biggest online crowdfunding platforms, Kickstarter and Indigogo , had raked in a grand total of US$4.35 billion in pledges from millions of individual backers. Kickstarter alone has been responsible for funding more than 100 000 projects, some of them tiny, like enabling a troubled person to get a “midlife crisis squirrel tattoo”, others huge, like resurrecting a multi-million dollar TV series.
The potato salad man (his name is Zach “Danger” Brown), by the way, ended up organising a public party featuring his famous salad to raise money for charity.
My mate, Dougie, is the person who really got me interested in crowdfunding. He successfully ran a campaign to get a micro-business venture off the ground a few years ago and then he was the driving force behind an effort to keep the doors of our favourite cinema open.
Cape Town’s Labia Theatre is legendary. Old and a little bit dishevelled, it’s the only independent cinema left in the city and regularly screens arthouse movies and documentary films you won’t see anywhere else. Last year, it was in desperate need of funding to buy expensive digital projectors. Without them, the cinema would have to close up shop.
Under Dougie’s leadership a bunch of us – all enthusiastic friends of the Labia – teamed up to run a campaign on a South African crowdfunding site called Thundafund. The response was overwhelming and in the end, 850 backers clubbed together R550 000, allowing the cinema to upgrade its operations and stay in business.
The great thing about crowdfunding is that anyone can do it and that success or failure is largely dependent on how much oomph you put behind your project. Here are a couple of tips we learned from our successful Labia campaign:
- Do your research and pick the crowdfunding platform that’s most appropriate for your needs. You might want to keep it local with Thundafund, go international with Kickstarter or Indigogo, or choose Patreon, which allows backers to make recurring contributions for ongoing projects. Make sure you understand how each of them works.
- In order to convince people to support your idea, you’ll need to put together an attractive project outline that includes a short video and text as well as photographs, mock-ups and artwork where applicable. You might have to invest a little bit of seed money, but it doesn’t have to be expensive – we got a filmmaker friend to shoot the promo video for next to no cost.
- Since most people are not in the habit of donating money for nothing, most crowdfunding schemes are rewards-based with supporters getting something in return for their financial input. Be sure to offer a variety of interesting rewards. We gave backers a choice of several rewards, including free tickets for future film screenings and having their name engraved on cinema seats alongside their favourite movie quote. Be very clear about what every supporter will get for the money they contribute and once the campaign is over, make sure they receive their rewards promptly. Beware of shipping costs if you’re offering physical rewards.
- The success of your campaign naturally hinges on getting as many people to contribute as you can. It’s all about creating community and hype by word of mouth as well as social and traditional media.
Our Labia crowdfunding campaign was a real eye-opener for me. Clearly you don’t have to have deep pockets to make your dreams come true. Provided that you can convince enough others that it’s a worthwhile idea, they might just help you realise it.
Photo via unsplash.com.