Crowdfunding Web Sites - Essay Example

? Crowd-Funding Web Sites Introduction Crowd-funding can be defined as a practice of soliciting financial resources from huge numbers of people, usually via an open call to one’s webpage, by posting a note in a communal place, or even through a controlled online marketplace widely known as crowd-funding website. This term is derived from crowd-sourcing. Its core intention is to capture the interest of social networks to contribute money and also pool resources together to support a project essential to its social network mem­bers (Grier 2013). The crowd - funding website is therefore an online marketplace for users who are usually called project creators who are given privileges to post ideas for and donors can donate small sums of money geared toward backing those projects. Examples of these websites include: Kickstarter which finances creative projects, IndieGoGo which finances a wide range of ideas and new startups and rocket hub. Discussion The above three crowd-funding are elaborated here: Kickstarter: This is a financial site for inventive projects ranging from games, films as well as music to art, technology and design. In this avenue each project creator is solely setting his project's financial support goal and deadline (Holden & Finlayson 2005). If the project is liked by the people, they can guarantee money to facilitate it happen. Given the project does well in achievement its backing goal, every backer credit card is charged on expiry of the time whereas if it fails to achieve its goal no one is charged thus funding in site is all-or-nothing. All items on Kickstarter have to be projected with clear goals and deliverables because it does not allow charity, cause or fund me projects. As (Huzel & Huang 1992) argues, Backers of these projects come from its fans and friends and also from blogs, Press, Facebook, Twitter, and Kickstarter itself. A sponsor of these projects obtains a close look at the creative process, and thus ensures that project comes to life. They can select from a range of distinctive rewards given by the project initiator which range from a copy of whatever is being produced e.g. a DVD, CD, book or a skill unique to that project. 100% ownership of the project remains with the creators. For successfully funded projects Kickstarter charges a 5% fee to the finances collected. Processing fees for US-based project done Amazon payments and those for non-US ones done through a third-party payment processor amount to 3-5% (Lawton & Marom 2013). Indiegogo: This is a multinational crowd-funding website whose main aim is to help individuals raise money for their personal projects. It has the same layout as Kickstarter though one can start any project even charity donations (Maguire 2012). The flexible funding plan has been developed to help backers receive the money even if the project fails to reach its funding goal though a higher fee charges are levied for this. Its founders are: Danae Ringelmann, Slava Rubin, and Eric Schell in the year 2008. The web site's structure gives users an interface to do the following: create their own page for funding campaigns, set up a PayPal account, draft "perks" for various levels of engagements and then publicize it in the social media like Twitter, Facebook and other similar platforms. Indiegogo charges a levy of 4% for every fund raised, and a 3% fee for credit card processing, plus an extra $25 wire fee to non-U.S campaigns (Rauf 2014). In case members had applied for the Flexible Funding plan and the campaign fails to attain its goal, Indiegogo charges 9% of the fund, but all the same get to take the outstanding balance away. Unlike other similar websites e.g. Kickstarter, Indiegogo releases the money immediately, when the donations are collected via the user's PayPal accounts (Neiss, Best & Cassady-Dorion 2013). Indiegogo also gives a straight credit card settlement acceptance via their portal. Those contributions are given up to the second week after the completion of a campaign.  This platform is also used by already-funded projects which need some publicity or to find distributors. Examples of famous Indiegogo campaigns that rocked the market are: "Let’s Give Karen -The bus monitor- H Klein A Vacation!" and Canary. RocketHub like earlier discussed platforms, this is an online crowd-funding site where Users all over the world post their fund-raising campaigns to collect monies and create awareness for projects as well as endeavors. The users are of different diversities, for instance: fashion designers, musicians, scientist entrepreneurs, photographers, writers,  game developers,  filmmakers,  theatre producers/directors, philanthropists and more (Steinberg 2012). This site was founded by Jed Cohen, Brian Meece, and Vladimir Vukicevic and launched in January 2010. Alon Hillel-Tuch joined this team later in January 2011. All of these founders have a creative background, e.g. Vladimir Vukicevic a tech-thinker and writer, Brian Meece is a singer and a songwriter, Jed Cohen an actor and producer then Alon Hillel Tuch is a musician and linguist. This site enables a one way move Directly-to-Fan’s social network -based outreach plus fundraising. Project leaders like fundraisers; do publicize these campaigns themselves via Twitter, Facebook and the like by displaying a campaign then users decide on the campaign’s deadline, the funding-goal then lastly the reward “perks” for contributions. This mechanism greatly shares some similarities with Kickstarter though in the event of not reaching funding target at the stated period, the leader of the project is able to remain with the collected funds. This site charges 4% on all the funds collected and 4% of the payment processing fees in case the project is funded fully. These levies of 8% and 4% processing fees are charged if the engagement does not achieve its goal (Young 2013). This mechanism is absolutely is an admired station to stimulate a project to be launched. It has a 3-step easy procedure to upload the project then track its progress as well as its status. It has its unique features like LaunchPad: which presents options for the RocketHub members to interact with superior brands, businesses and marketers to enable them raise communal interest and thus seek more possible opportunities for their ventures. Prizes vary from photography display venues to a four-week standard outreach campaigns by top marketers. Conclusion Crowd – funding is a more unique and most efficient way to solicit funds to new ventures which would otherwise be a little bit tricky if one had no financier thus it is a new technology which should be embraced by upcoming and already existing entrepreneurs. This is a digital age where business and other engagements are embracing it unanimously and even thriving very well. References GRIER, D. A. (2013). Crowdsourcing for dummies. New York, Wiley. HOLDEN, G., & FINLAYSON, J. (2005). Fundraising on eBay: how to raise big money on the world's greatest online marketplace. New York, McGraw-Hill. HUZEL, D. K., & HUANG, D. H. (1992). Modern engineering for design of liquid propellant rocket engines. Washington, DC, American Institute of Aeronautics and Astronautics. LAWTON, K., & MAROM, D. (2013). The crowdfunding revolution how to raise venture capital using social media. New York, McGraw-Hill. MAGUIRE, A. (2012). Crowdfund it! Canberra, Editia. NEISS, S., BEST, J. W., & CASSADY-DORION, Z. (2013). Crowdfund investing for dummies. Hoboken, N.J., Wiley. RAUF, D. (2014). Perry Chen, Yancey Strickler, Charles Adler and Kickstarter. New York, Rosen Publishing. STEINBERG, D. (2012). The Kickstarter handbook: real-life crowdfunding success stories. Philadelphia, Quirk Books. YOUNG, T. E. (2013). The everything guide to crowdfunding: learn how to use social media for small-business funding : understand crowd psychology : gain an online presence : create a successful crowdfunding campaign : promote your campaign to reach hidden funding sources. Avon, Mass, Adams Media. Read More