Introduction to Crowdfunding
Social media provided the basis to crowdfunding, powering the interests of the masses to finance new business and creative ventures. These channels aren’t just for the unknown creative talents roaming the world, however. Crowdfunding has become a mainstream method of financing, and has backed some popular new projects in recent years.
What is Crowdfunding?
“Out of many, one,” or so says the American dollar. This has never been truer than when dealing with money exchanged over platforms like Kickstarter, IndieGoGo and Fundanything. The websites highlight projects of all shapes and sizes, and seek funding from interested parties. Supporters can be fans and investors alike, though the payoffs they receive can differ significantly from one another.
For instance, when Zac Braf, star of the TV show Scrubs, went to Kickstarter to raise the $2 million needed for an independent film project, he offered 62 different rewards for supporters, starting with people who donated a mere $10.
“Pledge $10 or More
PRODUCTION DIARY// You’re now a part of this movie making club, and I want to show you the process, from start to finish. Each week throughout this summer’s shoot you will receive my Production Diary. This will include a video memo from me (with cameos from the cast and crew) detailing the process of making the movie. You’ll also get casting and production news first, before the Hollywood trades. And, I’ll email you a PDF of the “WISH I WAS HERE” screenplay right before the movie premieres.”
For those willing to cough up $10,000, Braf promised a credited walk-on role with a line written into the script just for them. The campaign lasted four days and far surpassed its goal, garnering a whopping $3.1 million in financing. Braf turned to the platform after Veronica Mars creator, Rob Thomas, raised over $5 million toward a movie based on the popular CW series.
A secondary type of crowdfunding exists that offers opportunities for real investment. Supporters wind up owning a portion of a company’s interests. While relatively new, AngelList and CircleUp are extending the ease of crowdfunding to a wider market.
How successful is crowdfunding? Kickstarter and IndieGoGo are two of the most popular crowdfunding platforms on the internet. Each service charges a small percentage for hosting projects, and both have a high rate of failure. Unless all of the money required for a campaign is collected, donations are returned to supporters.
While most platforms suffer a high failure rate, Kickstarter stats show that 80 percent of campaigns that reach at least 20 percent of their funding go on to succeed. This is often due to social media and people leveraging word-of-mouth to spread support.
This has been especially effective for industry professionals – like Braf and Thomas – to get noticed. Recently, Joshua Note of The Note Show supported the production of “Director’s Cut,” a collaboration between two of his childhood heroes, writer/magician/radio host Penn Jillette and writer/director/editor Adam Rifkin.
Like many fans of “Small Soldiers” and other Rifkin favorites, Note was inspired to donate through Fundanything. As the host of an interview podcast dedicated to finding and celebrating artists, the crowdfunding platform was a common sense fit.