Business Unusual

Got a great idea, but no money to make it fly? Consider crowdfunding…

Crowdfunding is the practice of funding a project by raising money from many people, typically via the internet.

Crowdfunding is a form of alternative finance, which has emerged outside of the traditional financial system.

The crowdfunding model is fuelled by three groups of participants:

  • The project initiator

  • Individuals or groups who support the idea

  • A "platform” that brings the parties together

In 2013, the crowdfunding industry grew over $5.1 billion.

The Money Show’s Bruce Whitfield interviewed Business Unusual Correspondent Colin Cullis.

Scroll down to listen to the audio for more detail.

There are three main types of crowd funding platforms:

  • Donations

  • Equity

  • Subscriptions

Donations:

  • Funds are donated to projects in return for rewards, acknowledgements or products

  • Some will return the money if the funding goal is not met, but some don't

  • Best suited for fans and enthusiasts for creative projects like games, movies

  • Very popular for products that don't exist yet

  • Preferred platform for personal fundraising

Platforms:

Equity:

  • Investment in the business not the product or service

  • Own equity in the business to get returns from future profits

  • Best for corporate ideas that will be an ongoing project and aimed at smaller investors

  • Covers the raising of capital for micro loans

Platforms:

Subscriptions:

  • Ongoing support for projects that create mostly free content

  • New model for paying artists that otherwise would not be able to perform

Platform:

The industry might not be new (it is over a decade old) but its growth has occurred in the last five years. With that level of growth it will attract some shady operators and some less than honest campaigns.

As an backer, do your homework before making a payment.

If you want to create a campaign, know that there is no guarantee it will get you the funding or that you will not be expected to give regular feedback to those who have supported you.

Each platform has different terms for using it. Check that you know what you will be charged for using.

Projects mentioned in the conversation:

Subscribe to our Business Wrap Newsletter


Recommended

by THE NEWSROOM

702 welcomes all comments that are constructive, contribute to discussions in a meaningful manner and take stories forward.

However, we will NOT condone the following:

  • Racism (including offensive comments based on ethnicity and nationality)
  • Sexism
  • Homophobia
  • Religious intolerance
  • Cyber bullying
  • Hate speech
  • Derogatory language
  • Comments inciting violence.

We ask that your comments remain relevant to the articles they appear on and do not include general banter or conversation as this dilutes the effectiveness of the comments section.

We strive to make the 702 community a safe and welcoming space for all.

702 reserves the right to: 1) remove any comments that do not follow the above guidelines; and, 2) ban users who repeatedly infringe the rules.

Should you find any comments upsetting or offensive you can also flag them and we will assess it against our guidelines.

702 is constantly reviewing its comments policy in order to create an environment conducive to constructive conversations.

Read More
Why we celebrate a saints day with commercial things to show love

Why we celebrate a saints day with commercial things to show love

Valentine's Day is hundreds of years old, but some of the tokens of our love are quite new.

Dead investors are some of the most successful (and other top tips on investing)

Dead investors are some of the most successful (and other top tips on investing)

Thanks to index funds, everyone can benefit from stock market investing, so why don’t they?

The surprising history of some well known products

The surprising history of some well known products

A successful business develops a product that will be popular with its customers. These originally were not.

Will the device that helped turn you into a couch potato also help get you fit?

Will the device that helped turn you into a couch potato also help get you fit?

Turning exercise into a game is hard, perhaps VR, virtual coaches and fitness trackers could help.

How ride-sharing companies such as Uber are changing transport forever

How ride-sharing companies such as Uber are changing transport forever

Tech such as GPS navigation on smartphones have made possible the creation of companies that are revolutionising transportation.

 How to find funding so your business can grow

How to find funding so your business can grow

Funding your business through what you have, not what you need, is a crucial entrepreneurial skill.

Popular articles
Minister Zwane confirms trips to Dubai and Switzerland

Minister Zwane confirms trips to Dubai and Switzerland

EWN parliamentary correspondent Gaye Davis says Mineral Resources Minister Mosebenzi Zwane received detailed and tough questions.

Zweli Mkhize 'taken by surprise' with latest cabinet reshuffle

Zweli Mkhize 'taken by surprise' with latest cabinet reshuffle

The ANC treasurer-general confirmed Mantashe’s comments that the President did not consult the ANC leadership on the reshuffle.

So what exactly is radical economic transformation?

So what exactly is radical economic transformation?

Wits associate professor of economics Christopher Malikane speaks to Azania Mosaka about the term that is being bandied about.

[CARTOON] Poephol With a Taste For Strife

[CARTOON] Poephol With a Taste For Strife

EWN's Dr Jack & Curtis take a look at the Spur confrontation that has taken the country by a storm.

‘My worst fear is being 80 years old and poor’ – famed actor Dr. John Kani

‘My worst fear is being 80 years old and poor’ – famed actor Dr. John Kani

"My earliest memory of money is my father saying, ‘Why do you want to do this thing? How are you going to feed the family?'"

Who is Advocate Tembeka Ngcukaitobi?

Who is Advocate Tembeka Ngcukaitobi?

The EFF lawyer stole the show during the state capture report court battle.

5 advantages of leasing instead of owning a car (lower monthly payments!)

5 advantages of leasing instead of owning a car (lower monthly payments!)

Want (or need) a new car? Dale Scorer (a wealth manager at AlphaWealth) reckons you should consider leasing.

3 easy questions could bag you R2000!

3 easy questions could bag you R2000!

WIN R2000! But only if you can prove you're a whiz of the MTN Biz Quiz by answering the following three questions...