Crowdfunding as a method of raising money for your project

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Like I said in the introductory section of my blog, among other topics I was going to write about helpful internet resources you can use in your daily life. Today I would like to introduce you the modern way of funding your project which is well known and widely used in some circles, especially in the US, and is becoming more and more popular in Russia nowadays. It is crowdfundig.

If we look up the definition of crowdfunding in WIKIPEDIA, we will see the following description of the crowdfunding as a process:

Crowdfunding is the collective effort of individuals who network and pool their money, usually via the Internet, to support efforts initiated by other people or organizations. Crowdfunding is used in support of a wide variety of activities, including disaster relief, citizen journalism, support of artists by fans, political campaigns, startup company funding, motion picture promotion, free software development, inventions development, scientific research, and civic projects. [WIKIPEDIA, http://www.wikipedia.org/]

In other words, as its name suggests,

Crowdfunding is a funding method where common people like you and me, henceforth the crowd, fund your personal or business project with their own money. [http://www.hongkiat.com/blog/crowdfunding-sites/]

So many of us dream of becoming a musician or an actress, of setting up an own company, growing a business or establishing a project aimed to improve the daily life of people in our community. Many got an idea of their future projects, possess necessary skills and motivation to realize it, but face difficulty in finding money to start.

Without solid permanent income source, such as salary or others, being young it’s really quite difficult to find financial support to make your ideas come true. That’s pity that many of us are not aware that such kind of simple and efficient funding method as crowdfunding exist, which may make our life easier by giving us support needed for realization of our creative ideas.

Now a little more details about how it works.

There are many websites created to help you to raise money for different projects. All you have to do is to come up with a really creative and good idea and to have good presentation skills and ability to convince people.

You’ll have to create a small video or to record a presentation about you, your idea which answers the question arises in minds of people who watch your video and are thinking about supporting your project (i.e. your potential investors), why they have to give you their money, what exactly you’re going to spend it on and what effects your project will bring to the society.

It’s completely up to you how you’re telling your little story in order to attract as many people to your project as possible and raise their money. The donations people make varies from very small numbers, such as few dollars, up to the unlimited amount.

The next step for you would be sharing your presentation with your friends, colleagues and all interested people who might become your potential investor. The websites will help you to promote your video to the audience. For its services the websites charge, as usual, a small fee from 0 to 5 %. After you did it, the process of money collection is launched.  And you have left to keep your fingers crossed and wait until the time allotted for donations collection expired and then either to open a bottle of champagne to celebrate your success with friends and family or not to give up and keep trying and searching for something else, if you didn’t collect the money needed to start your project.

What I consider being really good in crowdfunding that it allows you to attract a large pool of investors who are willing to contribute to your project by supporting it with small or big donations. You don’t depend on one big investor.

It is a habit in crowdfunding that all people who gave you any amount of money receive a small present from you. The kind of awards is completely up to you. The idea is to say thank you to the people who were so kind supporting you and your project.  

There are many different crowdfunding websites, like I said. Kickstarter is the world’s largest crowdfunding website. If a project is successfully funded on the kickstarter.com, the company charges you with 5% fee of the amount of money that’s been collected. Since the launch of the project in 2009, the Kickstarter platform raised more than $751 million from 4.6 million people and funded more than 47,000 creative projects. (kickstarter.com)

And now about similar Russian projects.  There are not a lot of them, but they exist. The first one is called Planeta.ru and is created by the musicians of one well known Russian rock band “Bi-2”. Since the launch of the project the platform collected over 25 million Rub. (appr. $900 thousands). [http://planeta.ru/welcome/about.html]

The company aplly 5% of the collected money. And there is also 5 % which goes to the pay system’s services. The average amount of money people ask for is around 500 thousands Rub. ($18 thousands). The average acquisition time is 3 months.

The next website is I’d like to present is the  most popular one. It was rewarded at the Internet Award “Start-up Project 2012” as a best socially significant project. This is the Boomstarter.  [http://boomstarter.ru/]

The conditions of the website’s services are almost exactly the same as in previous case. There are 5% fee of the collected amount of money going to the company and 5 % commission to the pay system.

The next website devoted to crowdfunding is the Smipon called as abbreviation from the Russian proverb “С миру по нитке” (Many a little make a mickle). [http://smipon.ru/]

This website is specialized in technical and social significant projects and suggest to chip in in restoration of monuments, repairing of the veteran’s flat and other similar projects.

The last website devoted to raising money for social significant and creative initiatives and other start-up projects, as well, is called the Rusini. [http://rusini.org/]

The main feature of this website is that the owners don’t require you to pay any organizational fee to the company. But you’ll still have to pay around 2% to the pay system.

The amount of raised money from this website is over 23 thousands Rub. ($900). The number of funded initiatives is 26. Which is, being honest, a humble number in comparison to other websites.

I hope you learned something from this article, like I did, and I would be glad to get to know that this article might have kindled your interest in crowdfunding. So you can explore its opportunities further and try to collect money for your project using this method.

Sincerely,

Inna

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2 thoughts on “Crowdfunding as a method of raising money for your project

  1. Pingback: Crowdfunding Spotlight: QU-SH-UG Pure Evil Miniatures Kickstarter | The Grinning Skull

  2. Pingback: Tips on Crowdfunding for your Project - CrowdFund Pros

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