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Crowdfunding is the technique of financing a project or endeavor by obtaining modest financial contributions from a large number of individuals, usually online. It is now an accepted approach for funding innovative goods, services, and creative projects.
Platforms for crowdfunding can be intriguing to IT entrepreneurs as a potential source of money for product development. But the feedback, suggestions, and word-of-mouth that crowd funders can offer are also crucial.
Crowdfunding has a variety of effects on innovation:
1. Promote Creative Products
Entrepreneurs may use it to sell novel products. Even if they don’t have much money themselves, entrepreneurs can use crowdfunding sites to raise funds from a significant number of potential backers. Due to the high initial costs associated with many new products and services, this can be a substantial barrier to innovation.
2. Get Feedback on Ideas
Getting input on their concepts might be helpful for entrepreneurs. Entrepreneurs can interact with significant backers who can offer feedback on their ideas through crowdfunding platforms. This criticism can be incredibly useful in assisting entrepreneurs in improving their concepts and making them more marketable.
3. Build a Community of Supporters
It can aid entrepreneurs in forming a base of supporters. Entrepreneurs can create a network of supporters interested in their product or service through crowdfunding platforms. For entrepreneurs, this group of people can be an invaluable resource since they can offer suggestions, help promote the project, and even assist with marketing and distribution.
4. Reduce the Chance of Failure
It can assist entrepreneurs in lowering their risk of failure. Before committing to a full-scale launch, entrepreneurs can test their ideas with a selected group of backers via crowdfunding sites. Entrepreneurs can use the feedback that they receive to improve their product or service before releasing it to a larger market, which can significantly lower the chance of failure.
What are the Examples of Crowdfunding Innovations?
Crowdfunding is a fantastic approach for sparking interest and raising money from a bigger audience.
Higher education, healthcare, arts and culture, museums, lower education, enterprise, charities, and nonprofits are a few examples of the diverse industries that rely on crowdfunding.
1. Higher Education
The University of Essex is one institution of higher learning that has used crowdfunding. In 2015, they established Click, their own platform. They were successful in raising £40,000 over the course of a year for 37 initiatives.
Michael Kolios, an Associate Dean at Ryerson University’s Faculty of Science and Chief of Radiation Oncology, Dr. Gregory Czarnota, used crowdfunding to raise interest in their research project (Gerstar, 2013). Improving breast cancer therapies was their main objective. Despite failing to raise the desired amount on Indiegogo, they did raise up to $53,390. MaRS Innovation was drawn in by the campaign itself, and they intervened to contribute to the project’s funding.
3. Art and Culture
In the Netherlands, the Luchtsingel Rotterdam project is one example of a successful crowdfunding endeavor. A 400-meter pedestrian bridge was to be built as part of the project to link three previously unconnected parts of the city.
This bridge spans a building and over railroads that connect to several projects, like a rooftop vegetable garden and a brand-new park. Donors were given their names on a wooden plank that would be used to build the bridge as a mark of appreciation. Only a few weeks later, 17,000 planks (costing £25 apiece) were sold.
Space Center Houston used crowdfunding to support the renovation of the Johnson Space Center exhibit. The money was provided in order to portray the space center accurately and to allow visitors to see how it was run at that time. They succeeded in raising $506,905, which is still expanding.
5. Lower Education
For a Net-Positive Energy Campus, the charter school Academy for Global Citizenship in Chicago raised more than $50,000. This consists of a campus with the aim of promoting constructive learning and acting as a hub for collaboration among communities.
One of the many examples was the huge popularity of Oculus Rift in 2013. Its goal was to bring accessible home gaming into the realm of virtual reality. For their $250K campaign, more than $2.4 million was raised.
World Help ran a campaign called The Crisis in the Horn. They wanted to raise $120,000 to send 20 containers of food to the Horn of Africa, which would have fed 4.8 million people. They assisted in generating donations and raising awareness with a team of over 150 volunteers. Over $180,000 was raised in the campaign.