By Mahesh D N
April 14th of 2013 was a monumental day in the lives of Veronica Mars’s fans. More importantly, the day is now remembered for when Crowdfunding truly became a global success story.
Crowdfunding is defined as the practice of pooling money from public sources on an online platform instead of the traditional method of loans provided by banks or financial institutions.
Business Model: A successful phenomenon hinges on a good business model in place with different stakeholders taking part and Crowdsourcing is no different. First and foremost, we have funders, who are the general public using their own means for donating money towards the project or cause. On the other hand, fundraisers are generally entrepreneurs or individuals inviting the donation of money towards their dream project. Lastly, we have platform providers, which are online websites that help fundraisers in realizing their dream project. DonorsChoose, Kickstarter, Sciflies, Indiegogo, USeed, Prosper and RaisingSocialare some of the popular platform providers.
Stakeholder Analysis: A platform provider can be perceived as a website, which gives an entrepreneur the freedom to express himself explicitly and attract attention regarding the project. Crowdfunding provider also takes upon itself the freedom to use various marketing maneuvers to bring in donations for the project. Entrepreneurs research those platforms that have had varied levels of success histories and have enough word-of-mouth marketing to deem themselves as being popular. Fundraisers also put the amount they are seeking for within a stipulated time, publish the target amount and an estimated time on the platform for reaching that target, while posting their project idea. Funders are those who patronize the site on a regular basis and fund a project, which they deem to be interesting by transferring their money online.
Profitability Analysis for Funders: Funders who successfully fund a project are not just in it for giving their money away. They expect returns and are enticed by different measures. The major one among them is gifts. Under the gifts model, we have the “Keep-it-All” model that gives the fundraiser the security of keeping the money donated all to himself even if the target is not met. The “All-or-Nothing” model means the fundraiser has to return the entire money donated if it falls short. The second model is more popular as it assures investors that only a quality project will be completed. Another reward is in the form of equity, whereby funders have the option of sharing the profits of the movie while they partake no responsibility, even if the project is a failure. Finally, we have the ‘Peer-to-Peer’ lending, where funders enjoy the interest received on the money donated by them to the project after credit terms are agreed upon.
Conclusion
Crowdfunding has caught on in the last decade and is very much a modern phenomenon. It gives entrepreneurs the freedom of no longer being held hostage to banks. At the same time, it provides a platform for the general public to bring to fruition a project they long for and believe in.
April 14th of 2013 was a monumental day in the lives of Veronica Mars’s fans. More importantly, the day is now remembered for when Crowdfunding truly became a global success story.
Crowdfunding is defined as the practice of pooling money from public sources on an online platform instead of the traditional method of loans provided by banks or financial institutions.
Business Model: A successful phenomenon hinges on a good business model in place with different stakeholders taking part and Crowdsourcing is no different. First and foremost, we have funders, who are the general public using their own means for donating money towards the project or cause. On the other hand, fundraisers are generally entrepreneurs or individuals inviting the donation of money towards their dream project. Lastly, we have platform providers, which are online websites that help fundraisers in realizing their dream project. DonorsChoose, Kickstarter, Sciflies, Indiegogo, USeed, Prosper and RaisingSocialare some of the popular platform providers.
Stakeholder Analysis: A platform provider can be perceived as a website, which gives an entrepreneur the freedom to express himself explicitly and attract attention regarding the project. Crowdfunding provider also takes upon itself the freedom to use various marketing maneuvers to bring in donations for the project. Entrepreneurs research those platforms that have had varied levels of success histories and have enough word-of-mouth marketing to deem themselves as being popular. Fundraisers also put the amount they are seeking for within a stipulated time, publish the target amount and an estimated time on the platform for reaching that target, while posting their project idea. Funders are those who patronize the site on a regular basis and fund a project, which they deem to be interesting by transferring their money online.
Profitability Analysis for Funders: Funders who successfully fund a project are not just in it for giving their money away. They expect returns and are enticed by different measures. The major one among them is gifts. Under the gifts model, we have the “Keep-it-All” model that gives the fundraiser the security of keeping the money donated all to himself even if the target is not met. The “All-or-Nothing” model means the fundraiser has to return the entire money donated if it falls short. The second model is more popular as it assures investors that only a quality project will be completed. Another reward is in the form of equity, whereby funders have the option of sharing the profits of the movie while they partake no responsibility, even if the project is a failure. Finally, we have the ‘Peer-to-Peer’ lending, where funders enjoy the interest received on the money donated by them to the project after credit terms are agreed upon.
Conclusion
Crowdfunding has caught on in the last decade and is very much a modern phenomenon. It gives entrepreneurs the freedom of no longer being held hostage to banks. At the same time, it provides a platform for the general public to bring to fruition a project they long for and believe in.
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