How Does Reward crowdfunding work?
In the world, there is many crowdfunding platforms are available. and many startup and business have generated funds from using those platforms.
In reward-based crowdfunding, the donors who believe and donate to the cause are given a small reward in exchange for their contribution towards the cause. It can either be the copy of the artist’s new album. etc
Reward-based crowdfunding might sound exciting and lucrative to the donors as they’re getting something out of it. While most of the donors will donate solely believing the cause, others see the gifts that they’re getting from it.
Reward-based crowdfunding works well in the case of B2C (business to consumer) ideas but not with the B2B (business to business) model.
Kickstarter is the largest rewards-based crowdfunding platform. According to the Kickstarter site, as of 2018:
- Donors had pledged over $4 billion million to projects on Kickstarter
- Over 156,000 projects have been funded successfully
- More than 15.6 million people have backed projects
- 5.1 million people have backed more than one project
- 50 million total pledges have been made
Three Categories Of Reward-based Crowdfunding
Pre-orders: It is one of the most effective ways of giving out rewards. The campaigner, if he’s a musician, can put up his album for pre-orders especially to the donors. It provides them early access to your work. This is why many video game makers choose to crowdfund their game, as in this way, people start evaluating the game, and it can give you more ideas to work upon, tailoring the game and making it suitable to people’s needs.
Services: If your project doesn’t fit for giving out pre-orders, then you can provide special services to the donors. Famous examples in the past include the campaigner making a meal for all the backers or developers offering to write code.
Recognition: This is a perfect entry-level gift you can provide to your patrons. Backers who are backing the project by paying less than $ 1000, can get their name displayed on the campaigner’s website, thanking them for their contribution.
Worldwide Crowdfunding platform provider
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