If you’ve been on the Internet for more than a day, you’ve likely seen mentions of Kickstarter and IndieGoGo. Whether it’s a medical emergency or a cool product that needs funding, crowdfunding seems to be everywhere.
But did you know that crowdfunding isn’t new? Micro-financing and micro-lending have been around for decades, and they established the platform for crowdfunding to thrive.
There are three models of crowdfunding: Donations and sponsorship, lending, and investment. The interesting thing about crowdfunding is that you get to kill two birds with one stone, as it serves as a marketing tool. Additionally, it allows feedback from potential consumers, and it’s a relatively cheap way to raise money.
Of course, it isn’t a perfect method. Your funds may be subject to more regulation, and you’re often limited in the amount of funding you can raise.
One of Kickstarter’s most notorious projects is the potato salad recipe fundraiser, which raised $55,000 and led to a memoir/recipe book. But as we’ve learned, it can be a powerful tool in business.
Learn more about crowdfunding and its successes with another infographic on the topic.