Do you think that you can win 1 million in less than a day? In January 2015, three friends, popular designers (artists), who worked for XBOX, Microsoft, The Oatmeal, and Marvel, decided to realize an idea they shared – a card game called Exploding Kittens.
At first sight, their idea does not seem more original than the popular games Ludo, Old Maid, Monopoly, or Scrabble. According to the plan of the creators, they needed the modest sum of $10,000 to launch the game on the market. They published their idea on a crowdfunding website with a detailed presentation including videos, photos, and text. They explained what they wanted to do and asked people, who wished, to finance their idea.
Seven hours later they had $1,000,000. The campaign ended with 219,382 participants, who invested the total sum of $8,782,571. In order to avoid any confusion, I will write it down in words – nearly nine million dollars.
It was an unprecedented and unseen thing until then – to collect money in such a way and at lightning speed from a group of people in an absolutely independent manner – no banks, no investors, and no public offering at the stock exchange.
Crowdfunding websites enjoy more and more popularity and everyone, who has a good idea or project, may publish an advertisement and start attracting initial capital. What is interesting here is that the financing comes from private persons in small sums from $10 to $1,000. Depending on the type of project and the sums, the authors are not obliged to share part of their business, but rather to provide certain services or products in exchange.
In the case of the Exploding Kittens, the smallest donation was of $35. At the exchange of a donation, the donors received a “copy” of the game. This way you are not simply throwing money into the void, you purchase a game before it is even developed. In the different money-raising campaigns the authors offer different bonuses – from a thank you card and collector’s copy of a certain product, to a visit to the company, an invitation to its official opening or to the party for the official presentation of the product. All this is included in the donation made.
All kind of projects raise money in this innovative way – smart homes, spaceships, building a planet (like the Death Star in Star Wars), recording a music album, filming a movie… whatever you can think of, including an oral sex device, which raised more than $250,000 during its campaign.
Crowdfunding was a game-changer in the world of financing projects because it gave entrepreneurs the freedom of finding support directly from their consumers without counting on bank loans, funds, or investors, who are putting pressure on them for more sales and project development. This method gave ordinary people the chance to get huge sums of money in no time – something that cannot happen in the world of real business.
Apart from the money you can get, this is a good way to test the quality of your idea. If it targets end-consumers and they like it, they will finance it for sure. If your idea is stupid or if there are some vague intentions behind it, you will be given a “red card”, you will have the chance to reconsider your idea, improve it, and give it another try.
Although this method looks very tempting and easy, it is not. When you present your idea to a fund or an investor, more or less you are responsible for the requirements and feelings of the people you want to win over. Most often these are a few people, who make the YES and NO decisions.
However, when you look for financing from a large number of people, who will donate $10 to $100, you should prepare yourself really well to win their goodwill. You will not need a presentation that will meet the requirements of a couple of people or get a good evaluation for the perfect budget you have worked out, you need something that will grab the attention of these 1,000 or 10,000 people, who must like your project and support you in your initiative.
That is why most crowdfunding campaigns end up with a failure.