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What’s next for crowdfunding? Four predictions for the future

Crowdfunding has changed considerably in the last two years alone, so what does the future hold for this form of funding?

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Crowdfunding continues to change

Once upon a time, crowdfunding was done by begging friends and family to invest in your company, then formalized online with sites like Kickstarter and Indiegogo where anyone can chip in smaller amounts to get you on your way. But with so many companies launched to help you crowdfund, and so many new strategies in a rapidly growing ecosystem, what does your company need to know about the future of crowdfunding?

To answer that very question, we tapped the expertise of Kaitlyn Houk is a crowdfunding Campaign Manager at RainFactory Inc., and uses platforms such as Indiegogo and Kickstarter to launch and run some of the most successful crowdfunding campaigns to date, most notably JIBO (the world’s first family robot which raised $2.29M), SKULLY AR-1 (the world’s smartest motorcycle helmet, $2.45M), Luna (the mattress cover to make any bed smart, $1.1M), and Snap Judgment (the NPR radio show that tells stories with a beat, $209k). Her expertise is marketing and fundraising, and Houk spends her days sitting side-by-side with entrepreneurs every day to advise and execute on crowdfunding campaign strategy, inciting thousands to bring each new product vision to life. She has a BA in Political Science and Economics from the University of Virginia.

In other words, she doesn’t bleed red or blue, she bleeds green.

“Crowdfunding platforms have both flattened and broadened the fundraising landscape,” Houk opined. “Anyone with an internet connection can tap into this great fabric for raising support and acquiring customers. Even though crowdfunding is an open door for both product inventors and supporting users, it still takes agility and skill to succeed in a campaign.”

Houk works daily with clients who are “makers” and tells us that the top advancement she’s seen of late is “how these inventors and innovators progress from blueprint to finished product is in taking ideas directly to the online community for validation. This gives them the ability to use community feedback to shape their products. The low barrier to entry, the speed and ease of communication, and the wide range of channels through which we can reach out to all contributors in a campaign, combine to form a tight feedback loop that campaigners can tap into to flesh out, fund, and adapt their product or idea.”

So what is the current state of crowdfunding? Houk offers her three-point overview below:

1. Power to the crowd

This tight communication loop empowers smaller groups who usually don’t have a voice within large companies to be able to demonstrate the potential success of an idea or product. Take our client, Jibo, for example: Jibo Robot, one of the highest-funded technology campaigns on Indiegogo, came out of some of the best and brightest researchers from the MIT Social Robotics Lab. They then took their product directly to the masses and quickly found the buzz-worthy demand they needed to move forward. Jibo could then take their tidy sum of 4,800 pre-orders and $2.3 Million raised and raise another $25.3 million in a Series A round to build their business.

2. Build it together

Early-stage crowdfunding means makers can tailor their product to meet demand. There’s a discovery process that goes on when companies decide to crowdfund. Customers ask tons and tons of questions; often questions that makers have never considered before. For instance, the creators behind the SKULLY AR-1 Motorcycle Helmet have spent a long time discussing the feature sets that they believed would add the most value for potential customers. After the launch of their campaign, and the communication loop tightened, they suddenly had a large pool of motorcycle enthusiasts wanting to know about more features. Backers have a direct line of communication to the maker of the product and real input on feature sets. The SKULLY team released videos, diagrams, and performed demonstrations of other possible features, and got very valuable feedback on which features to focus on.

3. Naked in public

Many of these products fail, and when they do, they fail in a very public way. Products that fail early in their crowdfunding campaigns walk away without any funding and a very bad scorch on their egos. It is even worse if they fail AFTER receiving funding, which is the specter that hangs over any successful campaign. Communication has sped up, but not in lockstep with fulfillment, or the speed to produce and ship products. There is a time crunch within the company itself to live up to its promises.

Every crowdfunding team wants to meet their goal to launch their product. But not every crowdfunded product is able to launch. Angry investors are one thing; angry customers are another. There are innumerable campaigns that don’t launch simply by self-selection: campaigners who are remotely timid about fulfillment sometimes back out or pivot their product before coming to the spotlight. One of our clients even told me, “If I’m opening the kimono, I better look ripped.”

So what’s next? Four predictions for the future

So what will be the next advancements? How will funding be innovated in the future? In her own words below, Houk offers four predictions every brand must pay attention to:

  1. Building Trust – More new digital marketing firms like RainFactory are entering the space to help campaigners hone their vision, and build confidence in the product as well as the ability of the team to bring the product to life. Customers and backers are needy: constant feedback, profuse thanks, and social validation are an imperative.
  2. Streamlined Operations – New services are cropping up to offer accessible and affordable fulfillment systems for crowdfunding campaigns, such as BackerKit. Even the crowdfunding platform Tilt has begun to offer fulfillment services. I wouldn’t be surprised if more platforms began to do the same.
  3. Vocal Backers – Backers will become more comfortable with this “buy and wait” model, as long as the crowdfunding community of trust is maintained. There are even backers who feel compelled to defend the product against critics. On the other side of the same coin, backers will have better “lie detectors” to call out any crowdfunding schemes that look suspicious and vocally demand more answers.
  4. Simplified Legalities – The legal system will catch up. The hybrid donate-presale model will reach a level of maturity and there will be mutually agreed-upon sets of terms and conditions for launching and running a crowdfunding campaign. Kickstarter and Indiegogo are the biggest requirement enforcers right now and they will continue to be the leaders in this arena. Their Trust and Safety teams are some of the best I’ve ever worked with.

Okay, so there is actually a fifth prediction:

  1. Fostering Growth & Imagination – The technologies that are being created via this direct-to-consumer method are truly awe-inspiring. I am excited each day I get to go to work and help these people make products that have a meaningful impact. More exciting technologies are developed, more dreams come true, and more jobs are created: one campaign at a time.

Houk concludes, “Case in point: Go fund somebody today and you’ll have an extra skip in your step. I promise.”

#Crowdfunding

The American Genius is news, insights, tools, and inspiration for business owners and professionals. AG condenses information on technology, business, social media, startups, economics and more, so you don’t have to.

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4 Comments

4 Comments

  1. PICISI.com

    June 8, 2015 at 5:20 pm

    Great article, Kaitlyn we are trying to launch our crowdfunding site at http://www.PICISI.com, however we need 4 more administrators to be able to do that, would you kindly refer some good people to us?

  2. Gitendra

    June 9, 2015 at 12:13 am

    Kaitlyn and her team do spectacular work – they don't just have deep understanding of the crowd funding model and its associated best practices, they also respect the entrepreneurial process. This means an immersive and comprehensive examination of specific and often unique client product development and growth needs. Blended together, these framework approaches make Kaitlyn and RainFactory a powerful and effective agency with an in-house feel.

  3. Pingback: What's next for crowdfunding? Four predictions ...

  4. Pingback: Which state leads crowdfunding efforts? Texas, duh - The American Genius

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Business Finance

Financial impostor syndrome – what it is and how to fix it

(FINANCE) Financial impostor syndrome is more common than most know, but seeing polished people in your industry may make you feel like your struggle is unique – it’s not.

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If you’ve ever felt like a fraud when it comes to your success, you’re not alone. Impostor syndrome is recognized as a “a psychological pattern in which an individual doubts their accomplishments.”

Typically, impostor syndrome is discussed as it pertains to your career, but it can manifest in other areas, like with finances.

Financial impostor syndrome has many components. You might feel as if you are bad with money and can’t be any different. Maybe you’ve made some bad decisions in the past.

You let these mistakes define your financial future.

Or maybe you dwell on the endless Instagram posts from people in your industry that depict the glamour of their financial successes (not knowing that they don’t own that jet, their client rented it for the weekend, or that they have a Ferrari but are potentially hiding it from being repossessed).

Some people believe money is bad or that they don’t deserve financial stability. Especially freelancers and entrepreneurs.

Alternatively, you may have money in the bank, but feel like a fake or fraud for earning it. You might think it was just luck that you have any resources, rather than believing in your own capabilities.

Financial impostor syndrome keeps you from reaching your potential.

Most people who have impostor syndrome also have low self-confidence and fear that they’ll fail. This can self-sabotage success. Instead of taking initiative and making positive changes, someone with impostor syndrome may bury themselves in work and avoid taking on extra responsibilities that could prove themselves.

When it comes to money, you might think that you can’t make changes, so why try? This type of thinking limits you.

Overcoming financial impostor syndrome isn’t going to happen overnight, but it is possible with some work.

1. Talk about it. You have to look at the reality of your situation versus your perception. Work with a mentor or mental health professional who can help you get information about impostor syndrome and help you manage your symptoms. You may want to consider getting a financial coach or manager.

2. Make a list of your accomplishments and successes. Celebrate your achievements. Learn to recognize what you contributed to your successes.

3. Create a new script for times when you feel like a failure. “I can improve my finances.” “I am able to stick to my budget.” I deserve financial freedom.”

4. Change your habits. Take small steps towards financial success. Spend cash only. Automate your savings and your bills. Cut up credit cards. Learn your strengths and weaknesses. Stick to your budget.

Additionally, you must forgive yourself for past mistakes.

Everyone has at least one or two regrets when it comes to their money. We don’t always see those mistakes, because we only hear about the person’s success. If you can’t learn to forgive yourself, you restrict your ability to make changes. Blame and shame never help anyone change behavior.

Make a plan to change your financial impostor syndrome. No matter what you’ve done in the past, you can start making small changes to your financial situation to find a way out. You deserve it.

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Business Finance

7 ways to quickly get outstanding invoices paid to you

(FINANCE) It’s easy to feel uncomfortable bringing up money with your superiors, but for a freelancer, it’s more important than ever to bring up the issue. Here are 7 tips to get your invoices paid quickly.

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For many, an awkward topic of conversation revolves around money. Whether asking for a raise or asking to borrow money, people often feeling uncomfortable when talking money.

This is equally, or possibly even more so, true for freelancers who are solely in charge of their finances. Without a system of weekly direct deposit, freelancers have to work overtime to keep their earnings in order.

The issue with this is that clients also have a lot on their plates, and something as simple as a freelancer’s paycheck is common to fall through the cracks. This causes freelancers to have to work friendly reminders into their repertoire.

However, freelancers may not always be knowledgeable of the best ways to keep their finances in check (no pun intended). Below are seven ways to enhance payment methods.

  1. You have to be willing to make billing a priority. Due to the fact that money is awkward to talk about, as aforementioned, many let this fall by the wayside. The best way to do this is to keep up to date with your invoices and send them as soon as they are done. Making a calendar specific for billing can help with this idea.
  2. This second bit dates back to when we were young and learning our manners: it is crucial to be polite. Not only is it the right thing to do, but it also increases speed in payment. Using “please” and “thank you” in invoicing emails are said to get you paid five percent faster.
  3. It is best to try and keep a complicated concept like finance as simple as possible. Make sure you are creating specific due dates. This will help to signify importance of payment.
  4. Now that virtually anything can be done online, it would make sense to use electronic payment verses an old-school check. Accepting online payments will get a user paid, on average, eight days faster as opposed to a check.
  5. This is an important notion to keep in mind for any aspect of your business life: be professional. Invoices are often seen by many eyes so it is best to include your business’s logo on said invoice. This has been found to increase chances of being paid on time by 10 percent.
  6. Specificity is urged again in the form of transparency. Make sure you are giving detailed descriptions on each invoice so that anyone looking at it knows exactly what you are being paid for. By doing this, you are 15 percent more likely to be paid on time.
  7. While you may be invoicing month by month, try to avoid sending on the 30th or 31st. Being that everyone, generally, sends their invoices in on these dates, it takes 10 – 20 percent longer to be paid. With everyone sending it at the end of the month, it has a tendency to back up payroll.

The most important thing to remember is that while the topic of money may be awkward, it is your money. If you let a few invoices fall behind because you are uncomfortable reminding your client, this has a way of adding up. Be sure to keep on track with your finances to earn what you are working for.

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Business Finance

How freelancers, entrepreneurs can start accepting cryptocurrencies

(FINANCE) If you’re considering accepting cryptocurrencies for your good or services, there are a growing number of options available these days – here are just a few.

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There are many reasons a small business owner, freelancer, or entrepreneur might consider accepting cryptocurrencies as payment.

One of the most noteworthy is the access to the more than 2.3 million people who used bitcoin as payment last year alone – that’s a growing pool of people who want to pay with a decentralized means of digital currency. Many have gravitated to cryptocurrencies as some believe they have proven to have clearer policies compared to traditional banks, less hidden fees, and more security against chargebacks.

More importantly than why though (especially in determining if its worth it to you and your business) is how you can start accepting bitcoin and other cryptocurrencies for your product or service.

Just like PayPal or credit card payments, you’ll need to first integrate a crypto payment processor wherever you plan to accept payment. This can be from your phone, your Shopify website, or your independently designed website. When deciding on which processor (and there are plenty to choose from), it’s important first understand the two types of cryptocurrency services available to you.

Custodial Wallets – These kind of wallets work like a bank do, in that they serve as a third party entity in control of your assets. Custodial services store your private keys, which is the secret alphanumeric code paid with your public keys. When you receive your crypto payments, they go into a wallet, where you request your money by withdrawal. These are popular for freelancers who are interested in converting cryptocurrency to traditional currency. Another advantage for this kind of wallet is you can contact your custodian’s customer service for access to your account if you’ve lost your password. The major disadvantages are that you don’t have complete control of your funds; so your wallet can be frozen by the custodian in case of maintenance, or stolen by hackers if they get into the processor.

Non-Custodial Wallets – These wallets can exist on paper, desktop, hardware, or mobile and are called cold wallets. No matter where it is stored, it is defined as an offline wallet provided for storing bitcoins. Your information is usually stored on a platform not connected to the internet, offering an added level of protection against cyber hacks and other vulnerabilities that a system connected to the internet is vulnerable to. If you don’t already have one of these cold wallets, you’ll need to establish one for a non-custodial processor. These kind of processors do not store or protect your private keys’ information, which allows the user complete control over their coin which can be important to you if you are accepting large amounts of money you want to keep safe, or you want to keep certain information very private. If you lose your private keys though, you lose your coin also since there’s no one to call and retrieve, like with custodial processors.

Once you understand the type of processor is best suited for your business, it’s easier to research and find processors that do exactly what you are looking for. Like I mentioned before, there are lots of different processors to choose from, but we’re going to go over a few custodial and non custodial processors to help inspire you in which direction to go

Custodial Processors:

Bitcharge: Bitcharge has the easiest instructions and interface on this entire list; so if simplicity is what you are after, start here. Instead of web integration, lengthy APIs or email invoices, all you need to start accepting cyrpto payments is a unique link they create for you. Once you have the link, you can give it to your clients however you choose, just like sending your Cash App or Venmo name. Another unique feature at Bitcharge is that they don’t require you to create new wallets for your cyrpto payments – all you have to do is add the address of your existing wallets to receive payment there. Bithcharge accepts Bitcoin, Etherum, and Litecoin, but are planning to add more to their portfolio. There are no transaction fees listed on the Bitcharge website.

Coingate: This payment processor is popular for accepting Altcoin (coins other than Bitcoin) payments, and currently accept over 40. This processor allows freelancers or entrepreneurs to accept payments in-store using an Android, iOS device, or other internet enabled devices. It’s also available as a plug-in so it can be easily integrated into your existing online store. There is a 1% transaction fee to use Coingate, with no additional monthly, registration, or support fees.

Cryptopay: Cyrptopay is a crypto payment processor that provides a guaranteed exchange rate, and also charges a flat 1% transaction fee. With this processor, freelancers can accept Bitcoin, Litecoin, Etherum, or Ripple. This cryptocurrency settles payments daily and provides funds straight to your bank account

Bitpay: Bitpay serves merchants in over six continents and is currently integrated with several different ecommerce solutions, including Shopify. Freelancers can also accept payment from automatically generated email invoices, or in person with a smartphone or tablet. They charge a 1% transaction Fee, with no hidden fees. The only cryptocurrency they accept is Bitcoin for now.

Coinbase Commerce: Coinbase is one of the world’s biggest payment processes and is also integrated with a variety of ecommerce solutions including Shopify and WooCommerce. With this processor, you are able to instantly convert it into fiat (traditional currency) to avoid price volatility. Users with this processor are able to accept Bitcoin Ethereum, Litecoin, or Bitcoin Cash. There is no transaction fee to accept cryptocurrency with Coinbase Commerce.

GoCoin: Go Coin is another popular gateway accepting payments in Bitcoin, Bitcoin Cash, Etherum, Litecoin, Dash, and EOS. It can also be integrated into popular commerce platforms like WooCommerce. Although there is no cost to sign-up for an account with GoCoin, there is a flat 1% transaction fee for each payment you accept. The most unique factor about this processor is the one-on-one help offered for experienced and inexperienced merchants. They also help with integrating the processor, customer invoicing, and payment support.

Non-Custodial Processors

These are newer on the market so there aren’t as many non custodial options, but here are the two options:

BTCPay: This processor is a non custodial, open sourced, and self-hosted payment processor designed for the technologically and cryptocurrency inclined. This particular processor allows the merchant to be in full control with no fees, or third party control like with the aforementioned processors. Payments go directly into their cold wallet, not the processor’s wallet. There are currently no fees to use BTCPay.

Atomic Pay: Atomic Pay is a global, non-custodial cryptocurrency payment processor. They eliminate the involvement of a third party processor by allowing you to accept payments “within seconds.” Unlike the aforementioned services, Atomic Pay does not store or withhold any of your information, so you’ll need to have a cold wallet setup. Atomic Pay also boasts an API Interface that allows developers and business to integrate with their “back end systems, websites, games, mobile applications, and point of sales systems.” The processing fees are 0.9% per transaction for the personal package, 0.8% for businesses, and 0.7% for their Enterprise package.

In conclusion:

Digital currencies continue to expand globally and offers a variety of benefits to small business owners, freelancers, and entrepreneurs. No matter where your potential client is located, international or domestic, both payments are handled the same, without any clearance necessary; unlike a wire transfer payment from an international client that could take up to a week or more. Not to mention the fees are less than credit card payment fees…

Despite all these perks, I am still not a certified accountant, and am merely suggesting you take a look at your business needs and see if those more than 2.3 million potential clients can be of use to you.

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