How many times have you had an idea for a brilliant project, only to think, "Oh, if only I had the money to get it started!" Once? Ten times? 100? As you probably figured out, ideas are cheap - turning them into reality is expensive. At least, that's the way it used to be. The proliferation of social media and e-commerce has opened up a whole new world of possibility for entrepreneurs, artists, charitable organizations and basically anyone who is long on mission, but short on millions.
Crowdfunding — what is it?
Crowdfunding is just what it sounds like: you attract the attention of a whole crowd of people and they all chip in to provide you with funding. While that may sound a lot like street busking, there are a few important differences: (1) People seeking funding typically use specialized crowdfunding websites to ensure the security of their exchange; and, (2) Depending how much they pledge, funders (aka donors or backers) receive perks (not equity) in exchange for their cash, such as sample products or the chance to meet a celebrity founder.
[More: 10 most valuable start-ups founded by women]
Curious? Let's look at some examples (including a very golden one)…
1) Glory Hole Doughnuts
Here is an example of how it works. Toronto pastry chef Ashley Jacot De Boinod began supplying her sinfully decadent doughnut creations to local restaurants and coffee bars, but her dream was to build her own gourmet doughnut shop. She found the perfect space, a former beauty salon, and decided to crowdsource the $15,000 she needed to renovate. So far, she has raised more than $6,000 on crowdfunding site indiegogo and threw open the doors to her glorious doughnut shop last month.
2) Pebble watches
Last April, the founders of Allerta Inc. had a goal of raising $100,000 in five weeks on crowdfunding site Kickstarter. Allerta has created the Pebble watch, a wristwatch that alerts you to incoming emails, phone calls or text messages from all your devices. The founders needed money to start production. One week in, Allerta had received $4.5 million from about 30,000 strangers. They are now up to about $10 million from nearly 70,000 individual supporters. In exchange for their pledges, these 'backers' receive Pebble watch prototypes.
[More: Hello crafty lady! How to turn your hobby into a business ]
3) Pilgrimage of Desire book
Author Alison Gresik and her book designer Michelle Farinella set out to raise money and profile for Alison's new book, Pilgrimage of Desire. The book is an inspiring memoir of Alison's year-long world travels with her young family, as she conquered her struggle with depression and channeled her creativity. She launched her crowdfunding effort on indiegogo while traveling in Paris and four months later, reached her $10,000 goal. The funds are being used to pay for self-publishing of the book.
4) Margaret Atwood's Fanado
Speaking of authors, it's not just emerging artists who are turning to crowdfunding. Margaret Atwood, the éminence grise of Canadian authors, raised almost $95,000 on indiegogo to create Fanado — an online theatre where artists and performers can connect with their fans directly — providing personal greetings and autograph signings. Funders had some incredible incentives, such as having their name granted to a character in Ms. Atwood's next novel!
[More: Trust your gut: Business lessons from Spanx founder Sara Blakely]
5) Amanda Palmer's music
Musician Amanda Palmer (aka AFP) actually was a street busker at one time in her early career. Today the musician has recorded a new album "Theatre is Evil" and embarked on a world tour with her group, The Grand Theft Orchestra. To recoup these expenses, Amanda launched a Kickstarter crowdfunding campaign, with a goal of $100,000. She ended up with nearly $1.2 million provided by almost 25,000 fans.
6) The Versalette by {r}evolution apparel
Two twenty-something travel buddies had an idea for an all-in-one multipurpose outfit that is perfect for traveling and especially for backpacking. Made of 100% recycled fabric, the outfit can be turned into a dress, a skirt, a top, a scarf and a bag — in 15 different variations. Once a prototype was made, the Texas-based founders turned to Kickstarter to raise $20,000 in order to start production. They ended up raising over $64,000 from almost 800 backers.
[More: Raising capital: 4 things NOT to do (and one important secret) ]
7) Emmy's Organics
This Ithaca, New York based company is committed to creating gluten-free, vegan and raw food products, using completely biodegradable and eco-friendly packaging. As the founders' business grew, they needed $15,000 for a redesign of their materials and logo. Emmy's indiegogo campaign netted them their total, no doubt thanks to the encouragement of handmade macaroons and super-fudge — sweet chocolate rewards for the contributors!
8) Golden Girl Finance
Whaaat? GGF is crowdfunding? Yes, it's true. Not only is yours truly the latest example of crowdfunding, we are sharing our campaign with you first! As you know, all the valuable content on our website is free to our readers and we want to keep it that way. Our mission is to keep reinforcing the message that women are powerful creators and critical decision-makers of the world's wealth. Through our website, books and public events, we aim to educate and empower women to recognize your own power and take control of your own finances — while also empowering the world to recognize the same.
And remember…the next big idea could be…yours.
GoldenGirlFinance.ca is a free personal finance and education site for women.
Nothing contained herein is intended to provide personalized financial, legal or tax advice. Before implementing any financial or legal strategy, you should obtain information and advice from your financial, legal and/or tax advisers who are fully aware of your individual circumstances, as well as fully aware of current laws and regulations.
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