Crowdsourced Project Funding

All too often the only thing that stands in the way of a great idea is a lack of funding. Innovation is expensive, and most people don’t have tens or hundreds of thousands of dollars lying around to finance their creative breakthroughs. The conventional methods of funding projects—bank loans and venture capitalists—have become inaccessible to all but the most well-qualified individuals.

So how do the rest of us mortals finance our dreams? Crowdsourcing is one way to raise the money to make your indie film, start your business, or develop your innovative new product.

Several crowdsourcing platforms have sprung up in the last few years, and the key is finding the one that best fits your project. There are plenty of other crowdsourcing platforms, but these are the big three.

• Kickstarter.com focuses strictly on creative projects. If you need to finance an indie film, this is the place to go.
• IndieGoGo is a wide-open platform. You can use this site to find contributors for anything from a for-profit business venture to a non-profit fundraiser.
• 40Billion is designed for startup businesses with funding needs up to $1 million.

You’ll still need to do your homework before you can expect to start raising money.

First, you need a plan. A business plan. This is the document that spells out your dreams in black and white. Writing a business plan is an important process that allows you to examine your project from every angle and to solve major problems on paper before they come up in reality. Investors, contributors and donors are going to want to know how you define success for your project, and how you will achieve those goals.

Next, form a corporation or an LLC. This step protects you from liability if things go catastrophically wrong. Discuss the advantages and disadvantages of each business structure with a qualified attorney or tax accountant.

Finally, you can get to the fun part: talking about your project with contributors! Crowdsourcing works best when you can get people talking about your project. After you create an account and project page on your chosen crowdsourcing platform, start blogging about your project. Post frequent updates on Facebook, MySpace, and Twitter.

If your project has a local angle, send a press release to local media outlets describing your project and its impact on the community. The contacts you make during fundraising are going to be invaluable later, when you launch the finished project.

Have you used crowdsourcing to finance a creative project, new business, or non-profit? Leave a comment to share your success stories and hard-won lessons!