Whether coming up with a new product or a new initiative, Crowdfunding is the key mantra to generate awareness. In 2012, the Jumpstart Our Business Startups (JOBS) act forever changed the way early-stage companies raise capital. Until then, companies were restricted to raising capital in two ways: privately through angel or venture investments or on a publically traded stock exchange. Access to capital was therefore restricted to companies that were already demonstrating traction in attracting customers to their product or service. Just like social media democratized marketing for businesses in the 21st century, crowdfunding democratized capital fundraising, lowering the barriers to directly contributing (or co-owning) the future of a company or product.
Could crowdfunding have been such a hit in a world without social media? The short answer is likely no. In fact, researchers have shown that fundraising campaigns with early and consistent activity (through posting updates and keeping original content fresh) were more likely to be successful in the long run. Consider one of Kickstarter’s most unique (and wildly successful) crowdfunding campaigns: the Potato Salad campaign. Zack Brown did not yet understand the impact he was leaving on the crowdfunding space when creating a $10 crowdfunding campaign in order to make potato salad.
In the end, after 32 updates and a viral marketing campaign that resulted in over 80,000 shares on Facebook in 2014 alone, Mr. Brown was able to raise 554200% of his intended goal with no product at all, demonstrating the viral influence that an effectively orchestrated crowdfunding campaign can incite in its audience. So even if your startup sucks, a little bit of strategy (or luck) in crowdfunding can take your business to the next level. Or not.
Part 3: Crowdfunding