Crowd Funding is a fund raising strategy where by one leverages the power of the internet and social media to seek out financial backers for a project.
Often these projects are concepts for commercial products or film and music projects and in most cases individual backers 'micro-fund' these projects with pledges of any amount they see fit (the average pledge amount on Kickstarter.com is US$71.00, but can be as litle as $1.00).
Whilst funding your great idea via the internet might seem like a pleasant alternative to dealing with the banks, ASIC warns ideasmen and backers both that there are lines that still must be toed. Backers should not expect a return on their investment, as with any investment there is risk involved and backing a project does not automatically make the backer a share holder in the resulting venture.
On the fund raisers side, financial backing cannot be accepted as a 'pre-order' for the product, as the product does not yet exists and may never exist depending on the steps taken after fund raising. The rules surrounding the sale of goods of services as per the Fair Trading Act must still be adhered to.
As an alternative to pre-orders and as an incentive to backers Make Badges is contacted by many customers who wish to produce custom made badges as gifts for their backers.
Two notable successful Crowd Funding campaigners we have worked with are The Paper Fox who raised over $10,000 for their now realised digital book and app. As well as Who Gives a Crap, the humanitarian and environmentally responsible toilet paper who also offered their backers custom made badges as part of their $65,000 raising campaign.