Latest Posts

SmallBizChat Recap: How Small Businesses Can Increase Their Level of Service
  Each week, the SmallBizLady, Melinda Emerson, hosts a...
1099-Misc Forms by February 17, 2015
Lucrazon Global Brand Partners can expect their 1099-MISC tax forms to arrive by the February 17, 2015 deadline both in their email in...
Lucrazon, LLC Announces Lucrazon Health - A New Health & Wellness Ecommerce Store
  IRVINE, Calif., Nov. 12, 2014 /PRNewswire/ -- Lucrazon, LLC, one of the country's leading Ecommerce System and...
Brand Partners- Update Account Information Reminder
Update: 11/12/14 - If you have questions regarding your status, please call in to 888-992-8989 from 7 AM - 7 PM Pacific Monday through...

CrowdFunding- 2013’s Source of Financing Part 2

CrowdFunding- 2013’s Source of Financing Part 2

Yesterday, we went over the different types of Crowdfunding in addition to explaining why people contribute. Today, we’ll go over how to prepare for Equity/Lending-Based Crowdfunding campaigns along with sharing more success tips.

Utilize a 30-day campaign period as that seems to be the “sweet-spot.” Longer campaigns don’t tend to do well, and anything shorter than 30 day won’t be as successful since it didn’t get enough time to ramp up. Prepare well in advance to spread out the news regarding your project by reaching out to others in social media. If you have a particularly interesting campaign, consider releasing a press release so that media news will pick it up, introducing your project to even more potential contributors.

You can also break up your project idea into multiple campaigns. For instance, the first 30 day campaign is for funding the materials and building momentum. The second 30 day campaign can be for funding the actual production. And the third 30 day campaign can be for packaging.

Just remember; ALWAYS show your plan on how you’ll spend the money. Contributors will feel more inclined to help when you’re transparent with usage of the money. Create visuals or timelines to show when/how the money will be spent.

Use Social Media to your advantage:

- Most people aren’t familiar with crowdfunding so edutain! (Educate and Entertain at the same time!)
- If you have promoters/investors, periodically give them recognition and shoutouts
- Use quirky pictures to spark interest
- Follow what your contributors are following to understand their interests
- Give an update every 1 to 5 days

Mistakes to Avoid:

- Don’t set high goals or unrealistic expectations (if you can’t meet it, you don’t get the money!)
- Don’t have a “build-it-and-they-will-come” mentality.
- Not bothering with marketing. You must market like crazy! Use social media.
- Underestimating small donations. 1,000 people contributing a $1 is worth more than 1 person contributing $50.

Business Plan Formula
Image Source: AGBeat

For Equity/Lending-Based Crowdfunding, you’ll need to develop a business plan to introduce to contributors/investors.

Overview of the Company

- What’s unique about your product/service
- What problem does it solve?
-  What are current or future competitors and their strategies?

Market & Strategy

- What is your target marketing/customer base?
- What is the potential size/growth of customer base?


- Who will be the key hires in your management team?
- Who will be board members (if applicable)
- Who will be advisors and what are their special skillsets?


- Provide the past 3 years of finances if available
- Provide audit report if you’re attempting to raise more than $500,000

Financial Projections:

- What is your anticipated revenue by year?
- What is your detailed spend analysis?

For intellectual property, you’ll have to be comfortable with sharing but don’t share patent applications. Share just enough to hook the contributor and to give a clear picture.

Some successful campaigns include The Stick N Find, Pebble: E-Paper Watch for iPhone/Android, Remee, Kingdom Death Monster Boardgame.

Unsuccessful campaigns include Easy Keepers, Ninja Baseball, Light, The Hyrtl Simulacrum.

As you can tell, all the examples are either Reward or Donation based. Once the JOBs act fully passes, there will be more Equity and Lending-Based campaigns flooding the platforms in which we’ll do another article on.


What happens to excess dollars that are raised?
For rewards based crowdfunding, you get to take it home.

If raising funds for a non-profit, are the funds tax-deductible?
It depends on the platform, but Indiegogo does allow you to sign up as a non-profit and only receive funds into a non-profit PayPal account.

Are there any restrictions and where is the money held?
For Reward/Donation based, there are no restrictions and depending on the platform, money and payment process is handled differently. Indiegogo allows you to receive funds as it goes, but Kickstarter will only give the money when you reach the goal.

For Equity, the money sits in escrow via ACH until the campaign ends and you’ll upload bank account details for that.

What % of the funds does the platform take?
Indiegogo is free to join but there’s a fee on any money raised, which is 4% if you reach your goal, or 9% if you don’t. Kickstarter is also free to join but charges 5% if the goal is met and zero if not. In addition there are 3rd party payments processing fees for all platforms to consider. Visit each platform’s FAQs for further details.

If you have multiple products, should you focus on 1 or a package for a campaign?
If its Reward/Donation based, focus on 1 product. And if it’s Equity / Lending-based, the campaign is typically raising money for your business, so you can provide an explanation of your full offerings.

This concludes Part 2 of Crowdfunding! We hope you found this helpful and as always feel free to leave your thoughts or questions below!


+Alice Ly
Social Media Manager
Lucrazon Ecommerce

0 Comments To "CrowdFunding- 2013’s Source of Financing Part 2"

Write a comment

Your Name:

Your Comment: Note: HTML is not translated!

© 2015 Lucrazon Inc. All rights reserved.