Crowdfunding is a great way to raise the money you need to sustain and grow your projects, support community events, or cover the costs of mentorship programs. But what is crowdfunding exactly? And how can you take advantage of this tool for your open source initiative?
Read on to learn what Jono Bacon, leading speaker on community and author of People Powered: How communities can supercharge your business, brand, and teams, has to say.
You may have heard the word “crowdfunding” floating around the tech industry for the last few years. “It’s the future of product launches,” and other attention-grabbing statements about it may have turned your head.
What Is Crowdfunding?
It’s true what people are saying, however let’s first discuss what crowdfunding is. Why is it valuable to you? As defined by crowdfunding experts at crowdsourcing platform Fundable,
“Crowdfunding is a method of raising capital through the collective effort of friends, family, customers, and individual investors.”
The reason it’s such a hot topic is that it’s totally inverted the natural way businesses often find funding.
Before crowdfunding, if you wanted to raise money for a new idea, your materials and data would all need to be presented to a limited pool of wealthy investors, and you’d have to hope someone liked it. Only very wealthy sources like angel investors, venture capitalists, and possibly banks would be there. And if you put an amazing idea in front of the wrong set of investor’s eyes? Well, that’s your loss of time and money.
Crowdfunding platforms such as Fundable, Gofundme, Kickstarter, and LFX Crowdfunding have flipped the model on its head, offering you the power to pitch your project to everyone. These campaigns typically raise money through many smaller donations from everyday people in addition to higher scale investors. This helps projects connect to passionate investors and fans, bypassing investors that might not understand the value of speciality areas such as open source.
Crowdfunding backers can choose how much to invest. You may contribute $30 to get a t-shirt and a sticker, or $2,000 to get early access to the first version of the product. It is a model that scales to different projects and budgets, and it can be especially powerful to raise funds for your open source initiatives.
Crowdfunding can be a powerful tool for starting a business, launching a project, or even just funding a worthy cause. There are lots of reasons why giving crowdfunding a shot would be a great idea for your cause. The money raised is often of lesser importance.
Three major benefits to crowdfunding:
- It provides a way to validate your idea
- It gives your team it’s first early adopters
- It’s a way to get feedback and refine your product before it’s fully launched.
Concept validation is important. By getting your idea in front of as many eyes as you can, you’ll quickly be able to see how receptive the public masses are to it. This will reveal any holes in your offer, copy, or other parts of your funnel, thus allowing you to fix it. Looking at LiveCode’s open source project on Kickstarter, we can see how the concept of a more tech-accessible future was inspiring enough to raise £493,795. While they didn’t know if many people would believe in the project, more people than they ever dreamed were inspired by the idea of coding being easy and accessible to anyone who wants to do it.
Crowdfunding can be a powerful tool for starting a business, launching a project, or even just funding a worthy cause.
Crowdfunding also gains you early adopters and loyal advocates. It’s great to know that you have customers waiting for your launch before you’ve even completed the product. This not only funds your product but gets people excited that they get to be a part of launching something! This excitement often fuels your crowdfunding investors to share your product on social media and with their friends. These early adopters are often essential to crowdfunding campaign success. Ghost, an open-source blogging solution, raised over £196,362, which is more than seven times over their initial goal. Those writers really are passionate about their creative freedom, and they signed up for ghost because it reflected those beliefs.
Finally, crowdfunding is a way to refine an idea itself. Don’t get upset if your crowdfunding investors start making suggestions to you about your product or business. Use this as an easy way to brainstorm improvements! Your team may never have thought of the ideas your investors will present to you- it’s a great (and free) way to improve your concept. OpenWorm, another crowdfunded project, combines open source tech and biology to build fully digital organisms. This has the greater scope of understanding the complex parts of humans to cure complex diseases, however they’re starting with the worm as the simplest living organism. They’ve been given feedback from medical and tech professionals to refine the project and give it the greatest chance of making an impact.
What Do You Have to Lose?
Hopefully, you now understand a little better what a powerful tool crowdfunding can be for your ideas. Crowdfunding investors are a group of movers and shakers just waiting to hear your idea to fund, refine, and get behind it. What do you have to lose?
Not much if you choose to crowdfund your project through LFX Crowdfunding. It’s risk-free, with 100% of every dollar you donate going to the project. Unlike most platforms who charge upwards of 13% for application, credit card processing, and tax form preparation fees, the Linux Foundation will match these costs for the first $10M raised, ensuring that all proceeds go toward creating value.
Raise and spend money transparently with a public ledger, get invoicing and tax support, and access to security scanning and mentorship programs. Is your project interested in boosting diversity in your community? You might even be eligible for a matching donation. Open source projects like KiCad, Manjaro and RethinkDB are already raising funds on LFX Crowdfunding. It’s worth learning more about if you’re considering crowdfunding your open source project.