Crowdfunding FAQ: The What, The Why and all the W's of Crowdfunding

You've got a great business idea, and you're ready to get started. You just need some money to make it happen. Well, we've got good news for you: crowdfunding is a great way to raise funds for your new project or startup. In this post, we'll cover what crowdfunding is, how it works, and the different types of crowdfunding platforms.

Let's get started!

What is crowdfunding?

Crowdfunding is a way for people to donate money to projects or startups they believe in. It's a form of peer-to-peer lending where people can contribute small amounts of money (usually less than $1,000) and receive rewards in return. The idea is that this: funding will help you get started on your project or business, and once it's successful, you'll be able to pay back the people who helped fund it.

In summary, crowdfunding is:

  • A way to raise money for a project, typically through funding websites.
  • Also known as crowd-sourcing, which means appealing to the public to get funding for an idea or cause.
  • Involves gathering small contributions from a large number of people who become "backers" of your project and/or offering rewards (tangible or intangible) in exchange for their financial support.

What are the different types of crowdfunding?

Before you create a crowdfunding campaign, let's dive deeper into the different types of crowdfunding. Here they are:

This form of crowdfunding is pretty self-explanatory. A project or business raises money from the public to finance its idea and gives a reward to those who contribute.

  • Reward-based crowdfunding

With this type of crowdfunding, donors receive rewards in exchange for their donations. For example, if you donate $75 to a Kickstarter campaign that's funding a new novel book project by your favorite author, then you might receive an autographed copy of the book when it comes out. Other rewards may include exclusive merchandise or access to special events.

  • Investment-based Crowdfunding

Investment-based crowdfunding involves raising money from investors instead of individual backers in exchange for equity (shares) in the company being funded by investors. These shares can be sold once listed on stock exchanges if they meet specific criteria set by regulators.

How does crowdfunding work?

Fortunately for you, the process is simple:

  • Set a goal and deadline. Funding websites like Kickstarter and Indiegogo let you set a fundraising target or "goal" in the site's parlance and a deadline to reach it.
  • Create your campaign page. The next step is to create your campaign page on either one of these funding websites or another crowdfunding platform that targets entrepreneurs (like Fundable).
  • Tell people about your campaign, so they can support it. Now that your generous investors are ready and waiting to hand over their cash (or credit card numbers), all you have left is to tell them about it! Post updates on Twitter and Facebook, email everyone in your address book, write about what inspired you on LinkedIn Pulse, run ads on Facebook if there's money left over from advertising costs after reaching out personally via social media first--anything goes! Just don't forget: It's not about you. It's about the cause.

Who can use crowdfunding?

Crowdfunding isn't just for businesses, artists, inventors, and philanthropists. Anyone with a dream can try to make it come true with crowdfunding—and even if you're not taking money from others, there are still ways to benefit.

people crossing a pedestrian lane

Let's say you're an aspiring writer looking for some validation. You'd like to write a book and have it published, but more than anything else in this world (including food), you want someone other than yourself to tell you that what you've written is good. Funding websites like Kickstarter give people who want their work published the chance to do so without having to pay all of the upfront costs themselves.

Instead of submitting manuscripts directly through agents or publishers on a one-to-one basis, authors use these funding websites as platforms where everyone can see what each project has going for it at once—and pitch their books accordingly.

How much can you raise on a crowdfunded project?

In a world where funding websites are the new normal for startup businesses to get their products off the ground (or at least get some funding for them), you might be wondering how much money you can raise on these platforms. Well, it all depends on what type of crowdfunding you use.

Some of these funding websitess have more reach than others. If your project is too niche or doesn't appeal to enough people on one platform, it may be better for your product to go elsewhere.

For example, if you're launching an app that helps people find local farmers markets in their area and only have 100 users interested in this kind of service—while another platform has millions of users who might be interested—it would make sense to try that other site instead.

Similarly, if there are already several successful campaigns running within your niche on Kickstarter right now, but none on another platform like GoFundMe or IndieGoGo (which tend not to have as much traffic), then why not go with the one with less competition?

What are the best crowdfunding websites?

A crowdfunding website is a place where people can raise money for a project, cause, or business venture. These websites are also called peer-to-peer fundraising platforms because they allow you to give money directly to the people creating the project and being funded. Most of these sites have similar features, but some differences might make one more appealing to your needs.

Here's a list of the top five best crowdfunding sites:

  • Kickstarter - This is one of the most popular crowdfunding platforms out there because it's been around since 2009 and has helped launch many successful projects (and products). Some notable projects include the Pebble smartwatch and Oculus Rift virtual reality headset.
  • Indiegogo - This site is similar to Kickstarter but allows users to accept donations in addition to investments. This feature makes it more appealing for users who want to raise funds for a business or charitable cause. Some notable projects include Lily drone camera and Scanadu Scout health monitor.
  • GoFundMe - This site allows users to solicit donations for any purpose. Unlike Kickstarter and Indiegogo, GoFundMe doesn't require projects to be creative in nature. Some notable projects include the "I'm Not Racist" guy who got fired from his job after posting racist comments online and the "Justice for Harambe" campaign that raised over $100,000 to erect a statue in honor of the gorilla who was shot after a child fell into his enclosure at the Cincinnati Zoo.
  • Crowdrise - This is a platform for good social fundraising. It allows users to solicit donations for any purpose and provides tools for creating campaigns and events. Some notable projects include raising money for the medical expenses of children with cancer and providing clean drinking water in developing countries. Crowdrise is a good option for fundraisers who want to raise funds for personal, local causes.
  • SeedInvest Technology - SeedInvest is a crowdfunding platform for startups and small businesses. The site claims to have helped companies raise more than $400 million in investments from over 12,000 investors. It specializes in assisting entrepreneurs to raise capital from accredited investors (people with high net worth).

What happens when I make my goal?

You get the money. That's right, you now have a big pile of cash in your bank account that you can use to start your new business or do whatever else you want to do with the money in the first place. The possibilities are endless, but here are a few things to keep in mind before spending all of your hard-earned crowdfunding funds:

  • Make sure that what you're doing is legal. You might want to use some of this money for legal fees or tax payments, depending on how much funding you raise, and what kind of business model you're planning on employing.
  • Be careful about how much marketing money goes into developing a product versus how much goes into marketing said product after it's released/produced. Don't spend all of your marketing budgets before even having anything ready.
  • Don't forget about the costs associated with manufacturing and distributing your product. You'll need to have enough money set aside for the costs associated with manufacturing and distributing. These may include packaging, shipping materials, postage fees, labor costs (especially if you're selling something that needs assembly), etc.
  • And finally, don't forget about taxes! You'll have to pay for legal fees and tax payments out of pocket.

What if I don't reach my goal?

You can try again. You can ask for more money. You can ask for less money. You can ask for a different amount of money. Or, you could always try a different crowdfunding website, but that seems like a real waste of time when there are so many other options right in front of you!

Try again by revisiting your fundraising goal and adjusting it accordingly, or reduce it if necessary. If the problem is that your goal is too high—or just too large in general—then consider reducing your requested amount and increasing the number of people who are supporting your campaign page. In other words: if no one has given any money, then maybe they just haven't seen how awesome everything is yet!

The point is that you need to ensure that people know that you're on a crowdfunding site and your project. It's not enough to just post on social media, though—you should also send out emails with links so that people can easily donate money if they want.

You can use Strikingly to create a landing page exclusively dedicated to your crowdfunding project. Here are a few more tips to leverage Strikingly to gain more traction for your crowdfunding campaign:

  • Add a visible call to action button on your landing page. You can use the Hero section for this purpose. You can add a button and redirect your visitors to your crowdfunding platform.

Fodi website landing page

Image taken from a Strikingly user’s website

  • Use the Process section to show your audience your product production process or campaign timeline.
  • Use Strikingly's newsletter feature to send updates to your backers.

Strikingly newsletter editor

Image taken from Strikingly

  • Use the Big Media section and add videos of your product.
  • Add a Sign Up section to generate leads. These can be people who don't want to back up you up just yet, but want to learn more about you.


Image taken from a Strikingly user’s website

  • Add a Simple Store section to sell exclusive merchandise.

Smart Mini MIswak store section

Image taken from a Strikingly user’s website

Where else should I try to raise money to launch my business idea or product?

If you're looking for funding to launch your idea, there's no shortage of options. Crowdfunding websites like Kickstarter and Indiegogo have made it easy for people with new ideas to raise capital by reaching out to their networks and trying to get supporters on board. If a platform like this is right for your business, consider how likely people will be interested in what you want to do or buy.

You might also think about how much money you need—and whether the platforms can handle that kind of fundraising in your category (or if they have categories at all).

If reaching out directly isn't quite right for your business model, try posting on social media channels: Facebook pages, Twitter accounts, Instagram feeds—the list goes on! Social media has become one of the most effective ways of promoting any startup company or product because so many people use these sites every day (often multiple times per day). They're also great sources for feedback about what customers would like most about your product or service.

Not sure where else could be useful? Try asking friends and family who may know other potential investors. If those referrals don't pan out though, then nothing ventured, nothing gained—you might just find someone who shares similar interests with yours after all!

And lastly but certainly not leastly: personal savings should always come first before anything else.

Crowdfunding is a great way to get started with your business idea. It's an excellent way to test the market, raise money for your project, and get customer feedback.

You can start crowdfunding by simply launching a campaign on one of the many platforms available online. You can also consider hiring an agency that specializes in helping new entrepreneurs succeed at crowdfunding.

Hopefully, this article has given you a good idea of what crowdfunding is and how it can help you get started with your business idea or product. You may have noticed that there are many different types of crowdfunding, and it's crucial that you choose the one that best suits your needs. While some platforms require minimal effort on your part, others have strict guidelines about what types of projects they accept or how much money they'll let users raise.

As we always say, choose one that best suits you, your values, and your brand. Good luck with your project!