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You don’t have to be a billionaire venture capitalist to start up a new business or invest in one. More than 600 funding sites worldwide make it possible for inventors and entrepreneurs to raise the necessary capital through a collective effort of small or large contributions based on incentives. These virtual marketplaces offer an infinite variety of projects, products and investment opportunities.

Did You Know?

The average number of rewards per campaign is 14.

What Gets Funded? In 2015, crowdfunds yielded an estimated $34 billion and are projected to grow to over $300 billion by 2025. Community projects were the most popular category, with 63,000 entries in 2015. They were also the least successful, with less than 10 percent of the 63,000 obtaining the necessary funding. Music projects topped the charts as the most successful category, with 40 percent of the nearly 50,000 projects reaching their funding goals.

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Who Crowdfunds? Individuals age 24-35 are likely to participate in crowdfunding campaigns, and while 84 percent of investors in successful crowdfunding projects are male, female entrepreneurs have higher success rates than men do when raising funds.

Although creating a crowdfund page is easy, achieving success is another matter. At least two-thirds fall short of their fund-raising goals. Here are a few smart rules to consider before you join the crowd.

7 Tips for Creating a Successful Crowdfund Project

  • Choose a legitimate service. The majority of crowdfunding sites charge fees anywhere from 4 percent to 10 percent.
  • Create buzz. Launch your website and social media campaign six months before your crowdfunding begins.
  • Back yourself. Get the ball rolling by being the first person to fund your upcoming project.
  • Tell a compelling story. Explain how you developed the idea, its benefits, who it will help and why you need the money. Including a video is sure to help drive engagement.
  • Aim high, but not too high. It’s much better to surpass your goal than to fall short. (The average successful campaign raises about $7,000.)
  • Update frequently. Keep your supporters in the loop with progress reports and exciting news.
  • Reward contributors. Give out exclusive items, name characters after backers, or create custom content for backers to enjoy.

3 Considerations Before You Fund

  • Research, research, research. Check the backgrounds of the individuals offering the project; read the business plan; and ask questions via the contact link. Lack of response speaks volumes.
  • Realize the risk. Equity projects work like any other investment. There’s no guarantee. Don’t fund more than you can afford to lose.
  • Check your motives. Many funders are happy to help an artist get started or to help a friend pay his medical bills. But if you’re seeking a return on investment, read the terms of the project before you invest.

 

 

 

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