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Is Crowdfunding Worth It?

It is becoming an old adage, “Vote with your wallet.” Before crowdfunding, companies had to bring their products to the market before we could decide whether we liked it and wanted to support the company. With the advent of crowdfunding, raising capital for new products and services has become much easier for small companies or individuals to be able to bring their dreams to reality. This puts consumers in the market’s driver seat.

How Crowdfunding Works

For people unfamiliar with crowdfunding, it is a process where business or individuals put their idea for a product or service out for the public. The public then decides if the product has value to them. If they decide it does, they can choose how much they want to support the venture. Funding doesn’t close until the people close them or a certain time limit runs out. This allows companies to raise more than their original amount. To entice further donations, they usually offer stretch goals that will add to the product or service.

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Reward tiers are also set in place to encourage donations of a product. Video games could offer a regular or deluxe copy of the game depending on how much a person donates. Donations can go up fairly high in the price ranges, but so do the rewards usually. One large perk offered by a video game company in recent months included a jam session with developers at their studio.

Outside of products and services, there is also crowdfunding for content creators. Funding essentially works the same. You choose the level of your donation and its applied either by month or by the creator publishing a certain type of content, like a new podcast episode.

Crowdfunding Can Be Risky

Like any venture raising funds, it can be risky to jump into. Businesses can fail if money is mismanaged or product doesn’t sell as well as they had hoped. Standard in business is 1 year before a business will begin to see profits. There is nothing stopping potential investors from asking questions about the project and weighing the pros versus the cons.

See the complete article at GameSkinny.com.

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