Could crowdfunding kickstart your creative career?
If you're an aspiring musician, writer, filmmaker or artist, you could get financial backing via one of a new breed of websites.
If you have a business or project you want to get off the ground, it can be extremely difficult to get funding in the current economic climate. But the increasing growth of crowdfunding websites could help you make your dreams a reality.
What is crowdfunding?
Crowdfunding, as the name suggests, is when a group of people get together to pledge money to a business or a project.
In some cases, there's a financial return in the form of interest or shares. If you want to set up a small business or you're an investor who wants something back for investing in start-ups, we’ve covered the likes of Funding Circle, Seedrs, and Abundance elsewhere on lovemoney.
In this blog, I'm looking at creative crowdfunding websites. These list mostly artistic projects by aspiring (and sometimes well-known) filmmakers, musicians, artists and authors. It's one way to get your project off the ground without requiring a record company or film production company or publisher to fund it.
However, the people pledging money to these projects are not getting a share in the future profits of the business/project or any other monetary return on their investment.
Instead, depending on what’s being funded, the backers could receive anything from a credit in a film to exclusive music to signed items… the list is endless.
Creative crowdfunding websites
There are loads of creative crowdfunding websites out there now and they’re easy to use. You just post details of your project and what backers will receive in return. Once you're up and running, pledgers can see at a glance how close you are to your target.
On average, the website takes 5% of your total pledges as commission, but only once you’ve passed your target. But once you have hit your target, you need to make sure you can deliver the goods.
Let’s look at some of the biggest crowdfunding websites.
Just launched in the UK, this site has been very successful in the US, with over $350 million pledged to more than 30,000 projects. It’s aimed mainly at creative projects, such as films, music, art and games.
Like Kickstarter, this site is aimed at creative projects, with films, albums, plays and artworks featuring prominently, although the Spanish women’s under-21 hockey team want help to get to the Junior Championships.
Another global site, but this one allows funding for charity and entrepreneurial projects as well. Most of the projects on there are US-based.
This site (which you won’t be surprised to hear is aimed at musicians and music fans) produced arguably the biggest UK crowdfunding success story to date this summer. A guy called Ginger, founder of a moderately successful rock band called the Wildhearts, was on the verge of retiring from music when he was persuaded to give PledgeMusic a go.
His project, to record a triple album, received 555% of its target donations. Depending on the size of their pledge, people received anything from a download of all the tracks to a signed copy of a triple vinyl album. None of the releases were available from anywhere else except via the pledge.
Pledgers could also vote for their favourite tracks, which were then put onto a commercially available CD and download. As a result of the publicity surrounding the pledge, the album was one of the biggest-selling of Ginger’s entire career.
Well-known artists currently appealing for support include EMF (they want to release a DVD of a December gig), 10,000 Maniacs (new album) and the Brand New Heavies (new album).
But you don’t need to have had a hit to put your project out there.
The risks of crowdfunding websites
If you’re looking for funding for a project, there is obviously a risk you won’t reach your target. It's up to you to get the word out via events, social media, emails and even good old-fashioned letters and posters.
And as I said earlier, if you get sufficient funding you need to then deliver the goods (physical or otherwise). There have been a few instances where people have been overwhelmed by demand and haven’t managed to get their act together. Plan your budget carefully in advance to ensure you can meet your costs, whatever they may be, and add a 5%-10% contingency on top in case of emergencies.
If you’re pledging, there's also an element of risk, as no crowdfunding sites police their projects. So you could, in theory, end up with nothing with return, although instances appear to be rare. Do some investigating and remember the old adage: “If it looks too good to be true, it probably is”.