Business Tool: Crowdfunding

Crowdfunding, also known as collective financing, is a collaboration among individuals pooling their resources together. It mainly involves operations carried out through a network to support external entrepreneurs. The areas of application can vary, including:

• Financial contributions from fans to a team;
• Investments in businesses;
• Contributions to a political party;
• Aid to victims of terrorist attacks, and more.

History of Crowdfunding

The concept of crowdfunding may seem new, but its early manifestations date back to the 19th century. In 1808, Emperor Alexander II issued a decree requiring funds to be collected from the people for the construction of a monument to Minin and Pozharsky. Since then, several similar instances have been recorded. In modern society, such practices are prevalent almost everywhere. In France, funds raised were used to build the Eiffel Tower. The current President of the United States raised over 250 million dollars from supporters online to support his candidacy.

The full-fledged adoption of the term began in 2006. Around the same time, crowdsourcing (the transfer of resources for use by other individuals) emerged. Social networks play a significant role in promoting the term, actively helping to gather funds for specific purposes. The main feature of the platform lies in the ability to obtain funds without involving a bank. However, traditional intermediaries also find ways to benefit. They monitor the idea and the public's reception of it. If successful among users, intermediaries have the opportunity to create a similar enterprise.

The first instance of crowdfunding in Russia was marked by the fundraising project "S miru po nitke" (A thread through the world). The platform was created in 2010 with the primary goal of raising funds for monument construction. Public attention was drawn to the installation of a monument to Steve Jobs. However, only about 80 thousand rubles were collected out of the planned 128 thousand, leading to the project's suspension in March 2015. Crowdfunding in Russia is still viewed with extreme skepticism by the general population.

Types of Crowdfunding

There are several types of crowdfunding, each with its own characteristics and advantages. The most common types include:

1. Reward: As the name suggests, this method involves rewarding individuals who participate in funding ideas with gifts and prizes.
2. Equity: This method offers the opportunity to receive a percentage from a business. It is characterized by long-term collaboration, and participants may even have a share in the company.
3. Debt: A newer form of support, based on receiving funds in exchange for future investment returns.

Less popular methods rely on voluntary donations for cultural monuments and aiding victims.

How to Make Money with Crowdfunding

Anyone can utilize crowdfunding platforms. Most platforms do not charge additional fees for posting information, but a commission of around 5% may be required after funds are collected for a project. However, if the project fails, no fee will be imposed.

The key lies not only in the novelty and success of the idea but also in attracting investors effectively. It is crucial to target the right audience. For projects requiring significant funding, offering a share of the business to investors is recommended. The essence lies in the project's riskiness, allowing only those users confident in reaping benefits to decide to invest.

Crowdfunding is suitable for implementing creative business ideas. Popular choices for attracting investors include:

• Book publishing;
• Starting a small business;
• Charity;
• Research in scientific fields;
• Movie production.

There are other projects gaining popularity. The key to success in a business idea is its novelty and high-profit potential. Equally important is understanding the target audience of a crowdfunding platform. Spending time on sites to study the audience is essential. Here is an interesting approach to starting a business, focused on producing school notebooks. Though it requires a significant amount of money, the investment tends to pay off quickly.

Top Crowdfunding Sites

There are numerous platforms for fundraising, each with its own characteristics and target audience. Some of the most famous and popular platforms include:

1. Kickstarter.com

An American site that has been around for 5 years. Over this period, the platform has helped aspiring entrepreneurs and creative individuals raise approximately 1 billion dollars.

2. Indiegogo.com

This platform has been operating for 6 years, with the primary goal of promoting projects essential for societal development. One prominent project was fundraising for a mission to Mars, aiming to establish a human settlement through rocket construction and launch by 2018. To date, over 75% of the targeted amount has been raised.

3. Gofundme.com

This site focuses on a variety of projects. The total funds collected have exceeded 200 million dollars for the development of numerous businesses. It is an ideal platform for fundraising with a social aspect.

4. Boomstarter.ru

A Russian site that has been operating for just 2 years. In this short period, the platform has gained significant popularity, featuring 12 categories for fundraising. The record is held by the financing of the film "28 Panfilovets," which raised 3.2 million rubles.

5. Planeta.ru

A highly successful project that has raised over 55 million rubles in one and a half years for business and creative ideas realization.

Share this article with friends and acquaintances. Learning about such a system may enable them to bring grand ideas to life.