2.1 - CROWDFUNDING MECHANISMS OF ACTION

An overview of the mechanisms of action of crowdfunding to establish a uniform baseline of knowledge about what crowdfunding is, how it works, who the players are, and various terminologies we’ll use throughout the workshop.

Creator. A “creator” is someone who is trying to raise money for their passion project, startup company, or cause. You are a creator.

Project. Your “project” is the creation, company, or cause you’re trying to raise money for. It’s important to think of your project as finite, in that it has a defined start and end point.

Campaign. A “campaign” is your all encompassing, choreographed effort to raise money for your project through crowdfunding.

Backer. A “backer” is someone who invests or pledges money to your campaign in exchange for some kind of reward.

Reward. A “reward” is an incentive creators give to their backers when a pledge is made. For example, a musician launching a new album might offer a signed CD to a backer who pledges $25. The neatest thing about rewards is you don’t have to deliver them until after your project gets funded and is up and running.

Platform. A crowdfunding “platform” is one of the dozens of websites (ie. Kickstarter, Indiegogo, Fundable) that help connect creators with backers and facilitate the collection of funds via credit card.

Profile. Your “profile” is a webpage setup on a crowdfunding platform where you describe your campaign, upload a video, and accept pledges from backers.

Tribe. Your “tribe” consists of the people you know who are willing to go above and beyond to help make your campaign a success.

The Media. Members of “the media” include local journalists, bloggers, online publication contributors/writers, and national and international newspapers, magazines, television, and radio.

FAQs

Is there a time limit on when the rewards I offer backers have to be delivered?

There’s no official time limit on when rewards have to be delivered. However it is important that you identify your own timeline and communicate it as accurately as possible to your backers.

What happens if I don’t reach my funding goal?

This really depends on which crowdfunding portal you go with… For example, Kickstarter makes you give back 100% of the money you raise if you don’t meet your goal. Whereas Indiegogo lets you keep what you earn minus their fee. This will be detailed further in a later module.

What’s the maximum amount of money I can raise through crowdfunding?

There is no limit! How awesome is that?

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