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Crowdfunding Guide - How Does Crowdfunding Work

You may ask this: 1 crowdfunding how much equity 2 do good crowdfunding 3 do i have to pay taxes on crowdfunding 4 do some good crowdfunding 5 do you get a return on crowdfunding 6 do you have to pay tax on crowdfunding 7 do you have to repay crowdfunding 8 do you pay back crowdfunding 9 do you pay taxes on crowdfunding 10 do your own crowdfunding 11 do's and don'ts of crowdfunding 12 how can crowdsourcing and crowdfunding be used in marketing 13 how can i do crowdfunding 14 how can i get crowdfunding 15 how does crowdfunding work 16 how long should a crowdfunding video be 17 how much can be raised through crowdfunding 18 how much can i earn crowdfunding 19 how much can you raise from crowdfunding 20 how much money can be raised by crowdfunding 21 how to do crowdfunding 22 how to get crowdfunding 23 how to invest in crowdfunding 24 how to run a successful crowdfunding campaign 25 how to set up crowdfunding 26 how to start a crowdfunding business 27 how to start a crowdfunding platform 28 how to start a crowdfunding website 29 how to start crowdfunding 30 how to use crowdfunding 31 should crowdfunding be regulated 32 should crowdfunding sites vet projects 33 should equity-based crowdfunding be legal 34 should i invest in crowdfunding 35 should i start a crowdfunding business 36 should i use crowdfunding 37 should you invest in crowdfunding 38 what are the best crowdfunding sites 39 what can i use crowdfunding for 40 what can you use crowdfunding for

You may ask this:
1 crowdfunding how much equity
2 do good crowdfunding
3 do i have to pay taxes on crowdfunding
4 do some good crowdfunding
5 do you get a return on crowdfunding
6 do you have to pay tax on crowdfunding
7 do you have to repay crowdfunding
8 do you pay back crowdfunding
9 do you pay taxes on crowdfunding
10 do your own crowdfunding
11 do's and don'ts of crowdfunding
12 how can crowdsourcing and crowdfunding be used in marketing
13 how can i do crowdfunding
14 how can i get crowdfunding
15 how does crowdfunding work
16 how long should a crowdfunding video be
17 how much can be raised through crowdfunding
18 how much can i earn crowdfunding
19 how much can you raise from crowdfunding
20 how much money can be raised by crowdfunding
21 how to do crowdfunding
22 how to get crowdfunding
23 how to invest in crowdfunding
24 how to run a successful crowdfunding campaign
25 how to set up crowdfunding
26 how to start a crowdfunding business
27 how to start a crowdfunding platform
28 how to start a crowdfunding website
29 how to start crowdfunding
30 how to use crowdfunding
31 should crowdfunding be regulated
32 should crowdfunding sites vet projects
33 should equity-based crowdfunding be legal
34 should i invest in crowdfunding
35 should i start a crowdfunding business
36 should i use crowdfunding
37 should you invest in crowdfunding
38 what are the best crowdfunding sites
39 what can i use crowdfunding for
40 what can you use crowdfunding for

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Crowdfunding Success Code


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Introduction

Crowdfunding.

The word drums up all kinds of visions for the average person. Small

startups exploding in popularity overnight. Companies on the verge of

financial collapse being saved by a capital injection received through

crowdfunding.

Crowdfunding came into popularity at a time when it was desperately

needed. As traditional loans became nearly impossible for new

companies to get and angel investors became much pickier about their

investments due to the burst of the dot com bubble, crowdfunding saved

the start-up world by providing a way for these new and emerging

companies to find the funding they need.

In fact, crowdfunding’s brilliance lies in a couple of small features:

1. Companies typically do not have to pay back their funding. They

receive donations rather than loans. This can be extremely

beneficial for companies in the start-up stage, because paying back

loans often cripples new companies that need all their cash for

operating capital.

2. Because funding is spread out between hundreds, or even

thousands of investors, no one individual or company is taking any

risk in the company’s potential failure.

3. Unlike traditional investing, you won’t lose any of your company to

investors. You won’t have to give a venture capitalist any control

Crowdfunding Success Code


over your company, nor will you have to give anyone any stock. You

keep 100% control and ownership.

Crowdfunding is a win-win situation for both those seeking funding and

those providing it. Those seeking it get the funds they need for their

project, while those providing it get the satisfaction of knowing they are

helping a fledgling company or product while potentially receiving an

interesting benefit from the project’s founder.

If you’re seeking money through crowdfunding, there are some things

you need to be aware of. The most important thing to keep in mind is

that if you don’t meet your funding goal, you won’t receive anything at

all.

Remember that, because it bears repeating.

If you don’t meet your funding goal, you won’t receive anything at all.

If you set a goal of $10,000 and you only receive pledges of $9,999, you

won’t receive a dime. It’s an unfortunate situation, but it’s

understandable. It’s done this way for a couple of reasons.

1. It weeds out uninteresting projects, because those projects that

aren’t likely to succeed will probably never reach their funding

goals. People know an interesting idea when they see it.

2. It prevents people from asking for more money than they really

need. The more you ask for, the more risk you’re taking that you

won’t reach your funding goal, thus not getting anything at all.

In this report, you’re going to learn the secrets to setting up your

crowdfunding project in order to give you the best possible chance at

meeting or even exceeding your funding goal.

Crowdfunding Success Code


You’ll also learn how to use crowdfunding to promote a product before it

even comes to market, potentially selling out your first run before you

ever get past the prototype or development stage!

So let’s get started.

Crowdfunding Success Code


Getting Started

Different sites have different rules, but the basics of setting up your

crowdfunding project are pretty much the same no matter which system

you’re using.

Here are the basic steps to setting up a crowdfunding campaign:

Create your initial project, including a detailed information sheet

about yourself and your project and how money you need to

complete the project. It’s a good idea to include details about what

you’ll use the funding for, being as specific as possible.

Set a time limit for raising funds. This is usually anywhere from 1 to

90 days. The longer it runs, the better chance you have of meeting

your goal, but it will obviously take longer to receive the funds.

Promote the project in order to receive the most possible backers.

When backers contribute money, the funds will be placed into a

temporary escrow account.

Once the project has run its time limit, if it has reached its goal, the

donations will be released from escrow.

Crowdfunding Success Code


Popular Crowdfunding Sites

The first thing you’ll need to do is decide which site you want to use to

generate funding. There are dozens of popular sites these days, and each

has its own set of pros and cons you’ll need to weigh.

Let’s take a look at a few of the most popular and interesting

crowdfunding sites that are currently available.

Kickstarter

>> http://www.kickstarter.com

Kickstarter is perhaps the most popular crowdfunding website. It

launched in 2009 and has since been used by thousands of people, to

rise funding from millions of individual backers!

Crowdfunding Success Code


Here are some interesting facts about Kickstarter:

Creators keep 100% control and ownership. They do not have to

give up any ownership of their company, nor any share of their

profits. All funds are donated by backers with no expectations of

monetary gain.

Kickstarter accepts pretty much any kind of creative project you

can think of.

Kickstarter charges a 5% success fee, but you’ll only have to pay if

your project is fully funded. So keep this in mind and account for

the fee when you set your funding goal.

Crowdfunding Success Code


CrowdCube

>> http://www.crowdcube.com

CrowdCube, a UK-based crowdfunding solution, is different from your

average crowdfunding system. Rather than offering donation-based

funding, CrowdCube works more like traditional investment, where you

must either give up a percentage of your equity to backers (Equity Pitch),

or pay investors back loan interest (Mini-Bond Pitch).

Here are some facts about CrowdCube:

You must give up a percentage of equity to investors or pay back

bonds.

You must have a business plan and financial forecasts available in

order to be investment ready.

Crowdfunding Success Code


CrowdCube is a good place to try if you’ve tried other funding methods

and haven’t been able to reach your goal. Because you’re relinquishing

some equity in your company or future profits, it may be easier to get

funded.

IndieGoGo

>> http://www.indiegogo.com

IndieGoGo is very similar to KickStarter. It’s a bit more geared toward

creative pursuits than other sites, but they still accept physical products

as well as creative projects like movies and books.

Here are some facts about IndieGoGo:

You keep 100% ownership of your company.

The success fee is 5%, which is lower than some others, However, if

you don’t meet your goal, the fee is still 5% unless you chose the

"Fixed Funded Option" which has no fee - but you do not get to

keep any money.

Crowdfunding Success Code


There is a 3% processing fee for payments from credit card and

PayPal.

Unlike other sites, you still get to keep any money you raise, even if

you don’t meet your goal. However, if you opt for the Fixed

Funding option, you must reach your goal in order to keep any

money.

RocketHub

>> http://www.rockethub.com

RocketHub is a unique system, because it allows you to raise funds

without worrying about whether or not you meet your goal or paying

huge fees. They are a lot more friendly to smaller ventures.

Crowdfunding Success Code


Here are some facts about RocketHub:

Free to launch a project.

You keep all the funds you raise, even if you don’t meet your goal.

Fastest payouts in the industry. They pay on the first Friday after

your project ends. It takes approximately 5-10 business days in

most cases.

Lower fees than most other sites. 4% success fee if you reach your

goal, or 8% if you don’t, plus 4% credit card processing fees.

Potential to have A&R fund your project.

Crowdfunding Success Code


Setting Goals

Setting your goal is a critical element of any crowdfunding campaign,

because most sites require you to reach that goal before releasing any

money to you. If you don’t meet your goal, you get nothing, and backers

receive their money back.

Why do they do this?

The main reason is to ensure that only quality projects get funded. For

example, if you ask for $5,000 to publish a short story, they don’t want

that to get funded, because there’s no reason anyone should spend that

kind of money to publish a short story.

They also want to ensure you don’t ask for more than you really need.

You might need to ask for $500 to publish your short story (to hire an

editor and cover artist and maybe a bit more for initial marketing), but

asking for $5,000 would be completely unnecessary.

When you set your goal, figure out, in detail, how much money you think

you will need. You can then add around 25% on top of that to cover any

unplanned expenses and to cover success fees, processing fees, etc. If

you think you need $1,000 total, you can ask for $1,250. If you think

you’ll need $10,000, ask for $12,500.

Crowdfunding Success Code


Video Presentations

One of the most important things you can do to really generate interest

in your project and increase your chances of meeting your funding goal is

to create a really killer video presentation.

Projects with video presentations are much more likely to get fully

funded than those without video, because video is interesting, engaging,

and can present your project in a way that is much easier to understand

than text and pictures alone.

Here are a few tips for creating an effective pitch video:

Focus on the most important elements of your project.

Keep the video between 1 and 5 minutes. People will get bored if

your video is too long.

Let people know why they should invest in your project, and what

you feel it means to the world to get it out there.

Try to be a little relaxed and fun. If you’re all business, people are

less likely to be interested. If you’re friendly, more people will want

to invest in you.

Use music and pictures to connect with your audience. Try to select

media that really fits with your project’s theme.

Highlight the benefits you’re offering to backers, and let them

know exactly what they’ll get if they fund you.

Crowdfunding Success Code


Explain that if you aren’t fully funded, you get nothing, so ask them

not only to contribute, but to share your project with others!

Different platforms will have different requirements for video, however,

in general:

Videos must be 500MB or less

Must be MOV, MPEG, AVI, MP4, WMV or FLV format

Here are some resources that you can use to create a video:

>> http://www.Camtasia.com

>> http://www.fraps.com

>> http://www.CamStudio.org

Mac users can use:

>> http://www.ShinyWhiteBox.com

>> http://www.AmbrosiaSW.com

Crowdfunding Success Code


Promotions & Generating Buzz

Once you’ve created an interesting project with a great video

presentation, it’s time to get eyeballs on it. This means doing a lot of

promotion, and hopefully generating a little viral buzz.

Rewards

One of the most important things you can do to get people interested is

to offer interesting perks to people who donate money.

Here are a few ideas that will help you create great rewards:

Offer interesting perks at all levels of funding. If someone only has

$5 to contribute, offer to place their name in your movie’s credits

or on a special page on your website.

Give backers at certain levels an advanced copy or pre-release

version of your product.

Offer limited editions or signed editions of your product.

Create special rewards for international backers.

Remember to stick with the rules. Some sites don’t allow certain

types of incentives like coupons or gift cards.

Crowdfunding Success Code


Social Media

Don’t forget to use social media to generate interest. Ask everyone you

to know to share your project on all of their social media accounts, and

consider making social media accounts specific to your project.

Here are some ways you can generate buzz:

Create a Facebook page for your project.

Create a Google+ page for your project.

Create a Twitter page for your project.

Use Pinterest to pin images relevant to your project.

Create videos and encourage people to share them.

In order to encourage people to share your project, you might want to

hold some contests on Facebook or other media sites. You could give out

gift cards, advance copies of your project, or other gifts. Just be sure to

state that the giveaway has nothing to do with the crowdfunding sites

itself, because you cannot hold any type of giveaway like this on your

project page itself. Most sites prohibit this. Instead, hold it on your own

page or blog.

Be sure to make social sharing one of the conditions of entry!

Crowdfunding Success Code


Conclusion

Crowdfunding is a great way to get funds for your business or project,

but always remember that if you fail to meet your funding goal, you

won’t receive anything.

For this reason, it’s vital to estimate your true funding needs as closely as

possible. Never ask for too much, because the more you ask for, the

more likely it is you won’t reach your goal.

I hope that you’ve realized that crowdfunding is as much about

marketing as anything else in business. You need to market your project

and yourself to potential backers, and you need to use marketing to

attract viewers to your project, too.

Don’t just put up a project and expect people to flood to the page to give

you money. Unless you have a truly revolutionary project or product,

you’re going to have to put in some time and effort to get your funding.

Use the tips and tricks in this report, and you’ll be well on your way to

getting your first project fully funded!

Now get out there and get funded!

Crowdfunding Success Code


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