CrowdFunding: What’s In It For Contributors? Douglas E. Castle
When a project is posted on a crowdfunding website or platform, the project’s sponsors are obviously there for the capital. But what motivates contributors to put their funds into any particular project – And what makes some projects more attractive or appealing to these contributors? What draws contributors to one
particular project instead of another?
Contributors are moved to donateor place funds into a project for a wide variety of reasons, but very few of
these involve their active participation (as in ownership) in the company or organization, as no securities in the project company are being offered. There is certainly no stock market or investment “killing” to be won from either the standpoint of cash flow, income, appreciation or capital gains. Indeed, the contributors are unlikely to do any better whether the project merely survives or its shares become publicly-traded and it is a trending item in all of the financial publications, news aggregators and social media. Return On Investment (ROI) to the participant just cannot be calculated based upon any traditional investment model involving risk, return and reward.
In the case of donations and gifts to humanities and charitable causes, the motive is principally philanthropy, with the occasional lure of a souvenir, certificate or newsletter subscription;
but more often than not, it is just the feeling of joy that invariably follows a small, unselfish act of philanthropy.
But what of all of the applications, gadgets, gizmos, food chains, tech start-ups and environmentally-friendly thingamajigs? What are contributors looking for there? What do Project promoters need to give them? To show them?
Here’s the way it looks to be shaping up according to CrowdFunding Incubator LLC
Contributors should be getting at least these five
1) Some value for their contribution – discounted tickets, discounted meals, preorders at a bargain price, and opportunity to advertise. No matter what it is, it should be worthwhile, and the chancier the bet, or the longer the wait, the bigger the perceived value in consideration of the contribution;
2) Respect and acknowledgment for what they have given you, based upon good faith, a belief in your potential, and a willingness to ride with you. Perhaps they could be offered co-founders’ status, certificates of appreciation, a chance to meet with and ask questions of the Project founders. If you’ve received contributions, wouldn’t it make sense to be gracious and say “Thank You!” ?;
3) Information – these individuals want to get updates from the persons responsible about the status and progress of their Project. Newsletters or bulletins to each contributor are a great idea. On the conventional wisdom (oxymorons, anyone?) that no news is bad news regarding any financial matter [except one involving the IRS], your contributors want to know that their money is at work. Don’t let them feel that you’ve absconded with the funds and that you’ve decided it best to keep them out of the informational loop.
4) Input – Ask for your contributors’ input on your Project. Let them participate in surveys, focus groups, beta tests. You might find this to be tremendously worthwhile. You might receive some critically
useful information, and perhaps — a wealthy accredited angel or a well-connected executive who wants to help you. You’ll never know if you don’t ask.
5) Glory – Every contributor would like to share in the glory when you’ve achieved some benchmark goal. There are many ways to do this. For goodness sake – Project Sponsors are supposed to be imaginative
and creative. Find a means through which those true believers can celebrate with you.
Make it worthwhile for your Contributors to support you. Let them share in the dream and the glory.
Victory is sweeter when it can be shared.
Thank you for reading me, re-tweeting me and completing me.