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


This article first appeared on 702 : Got a great idea, but no money to make it fly? Consider crowdfunding…


Recommended

by NEWSROOM AI

CapeTalk 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 CapeTalk community a safe and welcoming space for all.

CapeTalk 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.

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

Read More
How to make over R150 billion in just 10 years

How to make over R150 billion in just 10 years

Get yourself some superheroes and watch the cash roll in.

Could the future of Tesla be a repeat of General Motors' past?

Could the future of Tesla be a repeat of General Motors' past?

A comparison of Tesla to that of General Motors a century ago may have some warnings for Elon Musk.

Your phone is now a travel agent. How the technology is changing air travel

Your phone is now a travel agent. How the technology is changing air travel

Is there nothing you can’t do with a phone now?

The 5th Industrial Revolution sounds as scary as hell

The 5th Industrial Revolution sounds as scary as hell

Predicting the future is easy, that is why anyone can do it.

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
[LISTEN] Van Breda's call to emergency services: 'My family and I were attacked'

[LISTEN] Van Breda's call to emergency services: 'My family and I were attacked'

The chilling call Henri van Breda made to emergency services on the night his mother, father and big brother were hacked to death.

SANDF soldier arrested for robbery on trial for attempted murder

SANDF soldier arrested for robbery on trial for attempted murder

Operations chief, General Barney Hlatshwayo's personal driver was arrested on Tuesday.

[WATCH] 'These thugs need to be arrested and rot in jail'- Bongani Bingwa

[WATCH] 'These thugs need to be arrested and rot in jail'- Bongani Bingwa

Bongani Bingwa shares his thoughts on the Panyaza Lesufi 'effigy' incident on Wednesday.

Everything you know about success is (mostly) wrong

Everything you know about success is (mostly) wrong

Allon Raiz on “Barking up the Wrong Tree: The Surprising Science behind Why Everything You Know about Success Is (Mostly) Wrong”.

Defence: State has failed to prove that Van Breda killed his family

Defence: State has failed to prove that Van Breda killed his family

Henri van Breda’s legal team presented its closing arguments in the Western Cape High Court.

Hope Ramaphosa: Cyril never lifted a finger to me, he wouldn't beat a woman

Hope Ramaphosa: Cyril never lifted a finger to me, he wouldn't beat a woman

Cyril Ramaphosa's ex-wife says abuse allegations spread by EFF leader Julius Malema are an attempt to tarnish his reputation.

Is Shakespeare still relevant to SA's school curriculum?

Is Shakespeare still relevant to SA's school curriculum?

How relevant is Shakespeare in SA's English literature which is written in a manner that no one speaks today?

3 reasons for the petrol price hike (and why it will hurt more than you think)

3 reasons for the petrol price hike (and why it will hurt more than you think)

Economist Dawie Roodt says that the petrol price hike is going to boost the cycle of inflation and force interest rates up.