The digital age has created many new possibilities in business financing. One of the most transformational of these is crowdfunding. Today, in just an hour or so, you can create a campaign that raises money from people worldwide, and build a customer base before creating a single product.
For the uninitiated, crowdfunding may seem like an intimidating universe. But it has been and can be a valuable tool for small business owners in many situations. Here are the facts that paint a full picture of the state of crowdfunding today.
1. At the end of 2014, crowdfunding had added 270,000 jobs and injected more than $65 billion into the global economy.
2. One of the largest crowdfunding campaigns ever, the video game Star Citizen, has raised more than $69 million on its crowdfunding site.
3. The best performing categories in crowdfunding are consumer products in the tech space, such as new consumer products and video games.
4. Not all crowdfunding campaigns meet their goals by any means. According to Kickstarter, only 44% of projects posted on the site meet their funding goal. Of the roughly 60,000 unsuccessful projects surveyed, nearly 40,000 failed to reach even 20% of their goal. In 2012, the global average success rate for crowdfunding campaigns was around 50%.
5. Crowdfunding has been successful in more than just consumer products. The Veronica Mars Movie Project met its goal in just 10 hours, and raised a total of $5,702,153 by the end of the campaign. The film was released in theaters on March 14, 2014. Another successfully crowdfunded film, Inocente, went on to become the first Kickstarter-funded film to win an Oscar for best documentary.
6. Crowdfunding may even become the tool that saves troubled industries, like book publishing. In 2014, Publishing projects were the third most commonly-funded projects on Kickstarter.
7. There isn’t a perfect formula to predicting which crowdfunding projects will be successful. One project that aimed for $50,000 and raised more than $13 million was the Coolest Cooler. The baking tool for math lovers, the Pi Pie Pan, raised more than $17,000 in just 30 days, on a $2,000 goal. And a miniature shotgun for killing insects called BugASalt raised over $577,000. Its goal? Just $15,000.
8. Successful crowdfunding campaigns aren’t an accident. Sure, you need a great idea and some luck. But over 70% of the crowdfunding campaigns that meet or surpass their goal have most or all of the following: a video introducing the product, a distinct voice for written copy, a listed product name, a project icon, graphics, logos, a customer service system, a prototype, an accurate price estimate, photos of the product, and a marketing strategy. As with all financing, the same truths apply: presenting yourself as a professional company instills confidence in backers.