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Digital Hollywood 2012: Crowd Funding – The New World Financial Source “the story” is king

October 28th, 2012 · No Comments

         By Geoffrey Maingart Marina del Rey,CA(Hollywood Today)10/28/12/–The Digital Hollywood conference at the Ritz Hotel in Marina del Rey was a unique learning experience for all who attended.  One of the most important subjects of the conference was “crowdfunding,” the great alternative way to fund a venture, and it can be done without giving up equity or accumulating debt. Rewards-based crowdfunding platforms allow entrepreneurs to raise funds from the community in exchange for simply giving their tangible products or other relative gifts.  This unique way of raising capital for projects is changing the world and companies dedicated to this phenomenon are being created constantly.  Two well-known companies among the many are Kickstarter and IndieGoGo and both are very successful.  To see a comprehensive list, you can check outwww.crowdsource.com The content summit – Crowdfunding 101 – in the Marina Vista Room on the last day was the place to be.  The panel included Adam Chapnick from IndieGoGo, DJ Paul from rowdfunder, Aubrey Levy from Mobchaser, Sean Keegan from Angry Video Game Nerd:  The Movie, Kevin Finn of Evil Empire and Varda Hardy, the filmmaker of “Big Voice. This hour was spent detailing the difference between the companies and some of the preparation one should know.  Since most people here were from the entertainment world the content obviously was geared towards that audience.  One theme that prevailed was “the story” is king. One has to know the demographic of your audience and an accurate assessment of your financial goal.  Remember, you are appealing to the interest of your donor and trying to get approval, first by the subject and story and later by some perk that will be rewarded.  There are all types of crowdfunding companies and platforms.  In some cases as in Kickstarter, one has to achieve the goal within a period of time in many cases.  Other companies such as IndieGoGo, one can keep the funding raised even if the goal is not quite accomplished.  Some of these companies are equity lenders and might expect a portion of ownership.  Most give the recipient the advantage of keeping 100% of the equity and unlike banks and venture capital firms, the requirements are minimal and it is up to the receiver to sell the idea to the worldwide investment/donor pool. On all or nothing crowdfunding platforms (meaning that you only get the funds raised if you reach 100% or more of your funding goal) there are so many benefits, and no fee to participate. If an entrepreneur sets a goal and doesn’t reach it, there is no penalty. All the funds are returned to each contributor, the entrepreneur doesn’t get anything and neither does the platform. On the other hand, if the fundraising project is successful, everyone wins and gets to be a part of a successful crowdfunding project. When successful, the average commission for the platforms is around 5% of total funds raised. The important understanding is that the pitch is to the world and if the story is great and the idea is relevant then people from all over the digital world will be willing to support it.  Instead of asking one financial source for a loan, you are asking in many cases millions for a small donation to develop a project, raise capital for an invention, begin a company or sponsor a show, recording or visual project.  This industry has now raised funds in excess of $2.8 billion dollars over the last year, up 91% over the year before. Examples were given as in the case of Varda Hardy who needed to fund a film and raised much more than the $35,000 goal and another made over $250,000.  A great idea or story well presented can finance most anything.  But, the idea is still only the beginning.  Every speaker emphasized that one has to know how to use the advantages of social media to make sure that your idea gets the attention of as many people as possible.  People must believe in your story to have a successful funding campaign.  Candace Klein of SoMoLend and Wil Schroter of Fundable could not repeat that enough times.  Understand that crowdfunding is a donation with perks which involves a platform, an individual or entity in need of funding, and a community of people willing to collectively contribute these funds in exchange for rewards and recognition.  Launching a crowdfunding campaign hedges startup risks and serves as a valuable learning experience. It allows an entrepreneur to gain market validation and avoid giving up equity before going all out and taking a product concept to market.  This allows ventures to receive thousands of organic visits from unique users and potential funders. These users are also important for viral marketing, as they have the ability to share and spread the word to their connections. The entrepreneur has the ability to engage the crowd and receive comments, feedback, and ideas and more important showing that your venture has received sufficient market validation at an early stage.  This will be very important when dealing with angel and institutional investors.  The investors are people who care about the venture’s brand and message, and are likely to be loyal customers throughout the life of it.  In order to get started on the crowdfunding path to funding and exposure, an entrepreneur only needs to contact the chosen crowdfunding platform that best suits their campaign theme and purpose, share their venture’s powerful message, make a video, and establish some attractive rewards. What started out as a social experiment several years ago has now been validated as a viable tool for thousands of people to take advantage of this source and associated benefits.   http://www.womensvcfund.com/   Crowd Funding  Sources http://mobcaster.com/ http://www.crowdfunder.com/ http://www.indiegogo.com/ http://www.kickstarter.com/

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