Why You Want Your Crowdfunding Campaign

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Be Realistic If You Want Your Crowdfunding Campaign to Be a Hit Like any great food dish, a successful crowdfunding campaign requires the right mix of ingredients. And just as a chef wouldn’t expect one three-egg omelete to satiate an entire night’s worth of diners, a half-baked crowdfunding campaign is unlikely to lead to a windfall of millions of dollars in cash. To start determining the right amount or a realistic amount to try to raise in a crowdfunding campaign, an entrepreneur needs to first determine what type of crowdfunding they want to pursue. Two of the more popular types are rewards-based and equity crowdfunding, but these two styles have significant differences. “Let’s be clear… Reward- and investment-based…show more content…
These types of crowdfunding are still quite new so the data is limited, but for those raising money from ordinary investors using the $1 million cap, the average business has raised about $700,000, according to Entrepreneur. Prior to these allowances for equity crowdfunding, only wealthy investors were able to contribute to these types of campaigns, which averaged a little over $400,000 per company, according to a September 2015 article from Crowd101. Serving a Treat with Rewards-Based Crowdfunding Rewards-based crowdfunding offers an alluring alternative to equity crowdfunding because entrepreneurs can hold onto their ownership stakes and offer contributors a reward instead. These rewards could be anything to entice donors, such as providing the full product itself or offering a small giveaway like a t-shirt. While this type of crowdfunding may sound sweeter, it could be more difficult to use this method as the main source of capital. On rewards-based crowdfunding site Kickstarter, for example, the average campaign has raised a little over $8100 dollars, and the success rate is only 36%, meaning those that don’t reach their funding goal don’t receive the capital. For those that did meet their goal, the average campaign raised just over $20,000, which is certainly a step up but still below the levels of equity crowdfunding campaigns. And
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