CROWDFUNDING BASICS: What you need to know!

Crowdfunding is a concept that allows businesses to raise small amounts of capital from a large number of investors, most often through websites such as Kickstarter and Indiegogo. It can be especially useful for small and startup businesses that may lack access to more conventional sources of capital needed to grow their business.

Kickstarter, Indiegogo, GoFundMe, and other crowdfunding sites have been around for years, helping companies and individuals raise millions of dollars to produce movies, build prototypes, pay medical bills or tuition, and fund a host of various other activities.

To boost the likelihood of success with a crowdfunding project, SMBs should craft a strategy that generates a significant amount of support for the project before it gets posted to a crowdfunding site, suggests Marcia Stepanek, who teaches courses on new and social media and cause video at New York University. “There is nothing worse than launching a project, then having very few people rallying behind it online, for all to see,” she warns. “Some things don’t change: people want to back a winner or a soon-to-be winner, and the power of group endorsements is that it leads to more support.”