Equity Crowdfunding

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Who Uses Crowdfunding Crowdfunding started
about ten years ago and is quickly becoming a
very popular way to finance new projects by
leveraging the power of social media and viral
marketing and exposure. It can be a source of
capital for both small and large projects, and it
has proven to work for million dollar projects
providing there is a general interest in the
project matched with an aggressive online
promotion. The reason that Crowdfunding is such
a popular alternative these days is the
flexibility that it gives the project founders.
It gives the little guy a chance to bring an idea
to life based on the publics view on the idea. If
a large traditional lending institution turns
down an idea because it doesnt make financial
sense to them, Crowdfunding gives the option to
secure the funding based on the concept and idea
and not necessarily the numbers. The power of
social media really helps to fuel the interest
and overall success of Crowdfunding. The projects
that seem to excel and gain the most exposure are
the ones that have something very unique and
different to offer. This creates the wow factor
and results in people naturally sharing the
idea/concept to their social media connections.
If people start to tweet or like the funding
proposal it can quickly spread and go viral. An
original concept that catches on can quickly
display just how powerful social media is. There
have been projects that have exceeded their
original funding amount goal by thousands of
percents. This puts them in a much better
position than they would have been if they just
got a traditional loan for the original amount
requested. It is always a benefit to have
additional funds, as unexpected expenses and last
minute details can push a project over budget at
the last minute and if there are not any
additional funds available it can spell complete
disaster for the projects. So, what are the best
ways to get a project to go viral through social
media? Well, there are two main things that each
project needs in order to have a successful
ending. The first has been mentioned earlier, and
that is to have an original concept that stands
out from the norm and will create a natural buzz.
You should never have to ask or convince someone
to share across his or her social media
platforms. Something going viral happens
naturally and if it seems forced the masses will
pick up on that. The other thing that needs to
be put in place is a nice reward for those that
donate to the cause. If the product is cool and
desired then you will find that many people will
donate in exchange for the item or an advanced
copy. An example would be a new video game that
is being produced. There could be several
different donation levels, including a small
amount of 5 that would give email updates
concerning the release date of the game, all the
way up to 100 that would include a copy of the
game before it was released to the general
public. These are the kind of deals that the
Equity Crowdfunding investor is looking for. It
isnt a traditional investment
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return, but it is a very cool and memorable
reward for helping to get the project off the
ground. Many people like to donate simply because
they like feeling like they were a part of the
products success. So, what type of company uses
Crowdfunding? Several different kinds of
companies use this as a viable funding source,
including corporations, non-profit organizations,
inventors, authors, musicians, entrepreneurs, and
small business owners. There is no limitations,
any anyone with an idea that needs funding can
find a Crowdfunding website to use in order to
get their message out there to the masses. Some
sites will only allow projects from certain
industries, but a little research will turn up
several different Crowdfunding options for those
looking to launch a product. The presentation of
the offer is very important, as it is the first
opportunity to capture the interest of potential
funders. These websites have thousands of
projects all seeking funding, so you need to
quickly grab the attention of visitors, and one
of the best ways is through a video. This allows
the potential funder to watch a video to learn as
much about the offer as possible. You want to
make it as easy as possible for them to get the
message and decide whether or not they want to
help support the project. Make it simple for
them! Dont make them read through a large
summary, because they are going to get bored
easily and move on to another potential project.
You could have the best idea in the world, but if
you present it incorrectly you will not get
funded. It is as simple as that, so just be smart
about it and put a huge effort into the
presentation. Aside from the presentation, you
also need to put a lot of thought into the
rewards you offer. Crowdfunding has gained
popularity because of the rewards, plan and
simple! Sure people like helping and they like to
support a great idea but a large percentage of
donors are doing so to claim the promised reward!
So, now that you know this there is no excuse to
not have a great reward for those that pledge
their hard earned money to support your
project. Crowdfunding involving an equity
position or an implied return have come under
fire recently with regulatory issues surfacing.
Because of this we suggest that you use the
reward angel and offer something in exchange for
the donation. This will make sure that there
arent any future issues and it will also allow
the project creator to maintain 100 ownership.
With the popularity of the reward model there
isnt a need to offer up an equity position in
order to attract money. There is a constant flow
of individuals looking at available projects on
the popular Crowdfunding websites, so as long as
you have a good offer it will get plenty of
attention!