The Idiot’s Guide to Crowdfunding
Have you heard the buzz about Airtame? They just raised $1,260,000 USD (that’s around 7,000,000 DKK) in capital crowdfunding with Indiegogo. It’s the most successful crowdfunding campaign in Europe and the 7th best in Indiegogo’s history and a very, very big deal to the Danish startup community.
If you’re scratching your head wondering what is crowdfunding? – let us help. It’s a pretty simple concept with big implications. Essentially, crowdfunding happens when a bunch of people pool their funds together to support an initative. It can be as much or as little as you want, and can go to supporting all kinds of causes, but it’s empowering because it lets the crowd decide what causes are worth being invested in.
You may have heard of some of the big crowdfunding platforms already. Indiegogo and Kickstarter came out in America, but the idea has quickly caught on internationally. FundedByMe is the Swedish version that has spread internationally and Denmark has launched their own version, Booomerang.dk, as well as the Danish Crowdfunding Association (started by Frederik Ploug Søgaard who also founded MarketingLab and FinanceLab!) to help spread the word and make crowdfunding a norm.
Crowdfunding is especially exciting for entrepreneurs because it breaks down some of the initial boundaries that founders face when starting up. They can pitch an idea to the world and see how they respond, skipping the initial stage of formal investor funding and immediately sending their business to the next stage.
“10 years ago you couldn’t get community validation because there was no way to show your product to the masses, and it was difficult to get manufacturing/distribution without a venture capitalist’s connection” Frederik Kehler, a crowdfunding enthustist, explained. “Now we’ve taken the power to the people, and we invest in innovation, normally at a very early stage. This means that the risk is divided between 2000 backers instead of one venture capital firm”.
But crowdfunding doesn’t just have to be for business. People are using the world wide web to fund all kinds of things. One guy got funded to get his tooth replaced because he didn’t have dental insurance Another campaign raised enough money to help a married couple have an IVF treatment so the wife could be pregnant. You can fund a mortgage, a dream, an artist, a non-profit, an experience – the possibilities are endless and their success depends on the generosity of your pockets.
There is a caveat to all of this. While crowdfunding can be a wildly successful way to make your idea happen, it also requires a lot of work. Planning a campaign and running one can be a full-time job. Many of these campaigns work because they offer an incentive to the backer in return. Whether it be a hand written thank you note or early access to a product being developed, people like to get involved because of the personal touches and the chance to be in on the action first hand. The most successful campaigns keep their backers well updated, consistently seek feedback and provide updates. They treat their campaigns like living animals that require daily care and attention in order to nurture growth and success.
It’s impossible to predict what campaign could go viral and attract wallets from all across the world. For all we know, you could be behind the next big thing.