CROWDFUNDING    Over the past few years, we’ve been hearing a lot about “crowd funding”, rather than getting money from a bank or lender, as a means of financing a project or business idea. Money man Jason Cunningham explains what it means, how people can use it to fund their dreams and talks to people who have used crowd funding to kick start their ideas.

     

 

 

 WHAT  IS  CROWDFUNDING?  Crowdfunding is the practice of finding supporters to raise funds for a project. The advent of the internet and social media has made it easier to connect people for crowdfunding, increasing its popularity as a way to source funding for a venture. Crowdfunding is also a great way for entrepreneurs to receive the financing and exposure they need in order to verify, execute, and help their ventures grow. Some examples of popular platforms include Pozible, Kick Starter and Indigogo. There are different ways to crowdfund, including the “Keep it All” method where the crowdfunder keeps all the funds raised regardless if they reach their target or not or the more popular “All or Nothing” where they crowdfunder only gets the pledged funds once they reach their fundraising target. Within the above there are also different ways to run your campaign. The most popular is rewards-based crowdfunding. This is when the promoter provides a reward to funders in return for their payment. For example, the funder may receive merchandise or a discount. In many cases, there are different levels or types of reward, according to the funder's contribution amount. A less popular way to crowdfund is donation-based where a funder makes a payment or 'donation' to the project or venture, without receiving anything in return. This method works best for charities and not-for-profits. If you earn or receive any money through crowdfunding, some or all of it may be assessable (taxable) income, depending on the nature of the arrangement, your role in it and your circumstances. All assessable income needs to be declared on your tax return. Check with https://www.ato.gov.au/Individuals/Income-and-deductions/Income-you-must-declare/Crowdfunding/ to see if you will need to declare it in your taxable income.

       

 

 

 TIPS  FOR  CROWDFUNDING  

• Plan your project ahead of the launch: To run a successful crowdfunding campaign you need to do more than posting your request and expecting to receiving pledges. You need to prepare and build your networks before you launch. This can be achieved by attending relevant events, building up a social following, and inform your target audience the campaign is coming. The bigger your network before you launch, the more people you will have to draw on for pledges.

• Come up with some interesting rewards: Unless they are your friends and family, people are unlikely to give you their money without anything in return. Rewards are an important and add interest and marketability to your project. Make your rewards as creative and diverse as possible and there are distinct differences in price and with what’s on offer. Early bird rewards are also a great idea.

• Go hard on social media: Use your Facebook, Twitter and Instagram pages to your advantage. And remember your launch and first 48 hours of your campaign are critical. Encourage you family and friends to pledge at the start to help build momentum. Be creative with your social media campaign to engage your audience.

• Pick something that resonates with the public: You need to give people a reason to support your project. They are looking for a great backstory. One that captures their interest, they believe in and they feel that is relevant to their lives.  

           

 

 

FEATURED  CAMPAIGNS    RED STAR CLEANER Red Star Cleaner has a rich history dating back to the early 1900’s. The original Red Star was a paste cleaner made in Fitzroy and distributed by bicycle to local factories, shops and homes. This paste was a natural clay and eucalyptus base that would 'clean hands to pots and pans'. In the mid 1930’s, the Red Star factory, and brand, was purchased by the Goodall family. They continued producing the quality cleaners for over 80 years in Melbourne. Kerrie Goodall ran a crowdfunding campaign on Pozible to save the Red Star legacy and the vat her grandfather built. To do this she needed $3,500 to relocate and re-commission the vat, which included improvements to the way it dispenses the product into the packaging. She offered her soap products as rewards to people who funded her campaign. MARIE WILSON Australian singer/songwriter Marie Wilson began playing guitar and writing songs as a private extension of her love for music. Her songs including "Next Time," which charted as a Top 40 hit in Australia and earned Wilson ARIA nominations for Best Australian Debut Single and Best New Artist, as well as 1998's Best New Australian Artist at the Radio Industry Awards. During this time Wilson also gained prominence as a performer, touring with K.D. Lang on her 1997 Australian tour, and with the Corrs in 1998. After having trouble funding her next album on her record label, Marie decided to go out on her own. With an already strong and loyal fan-base crowdfunding was the perfect means to do this. She set about raising $60,000 and offered a wide range of rewards to backers including the finished album, credits and live sets. For $5,000 she played a private gig on New Years Eve. Without a record company to answer to, it allowed Marie to keep commercial and artist control of her work. THANKYOU Funded in 2008, Thankyou (formerly known as Thankyou Water) is a social enterprise that has a vision to empower the everyday Australian to change the world through a simple choice within their everyday life. Thankyou’s three product range includes Thankyou Water, Thankyou Food and Thankyou Body Care – each exist for the sole purpose of funding water, food, hygiene and sanitation training in developing nations.

 

 

They needed a massive $1.2 million for their next project, to fund a baby range of nappies and skincare products. The profits from this range will go to a charitable work to help mothers and babies in developing countries. As a reward they offered the book, Chapter One, which is the story of Thankyou and follows the journey of three Australian kids from Melbourne with zero business experience and the shared belief that we all have the power to change stuff. Their campaign was different as backers could pay what they wanted to contribute for the book and in doing so raised well over the $1.2 million target.

 WEBLINKS For further information on Redstar Cleaner, Marie Wilson and Thankyou take a look at the following website:

http://www.redstarcleaner.com.au/ http://www.mariewilson.com/ https://thankyou.co/