Besides venture capital, crowdfunding is also a way for startups to seek funding. Crowdfunding is a form of soliciting help from the community to assist project owners or those who come up with ideas when they lack the funds to implement them.
To encourage contributions, the project owner offers supporters souvenirs or discounts on product purchases. The donated money can essentially be considered a pre-order for the product before it is released. Because it's a pre-order and there's a risk of not receiving the product, the pre-order price is usually 30%–50% lower than the market price.
Currently, crowdfunding is quite popular around the world .
Indiegogo is one of the crowdfunding platforms for startups and innovators. Founded in 2008, this platform helps projects access investors and raise capital through the support of individuals and the community.
Indiegogo is the largest crowdfunding platform because it has no field restrictions, allowing fundraising for any project or idea with various purposes.
Indiegogo has 15 million active users from 224 countries and territories each month, helping to raise funds for over 800,000 ideas worldwide. The fundraising success rate is 47%. The platform charges a fee for successful fundraising projects.
On Indiegogo, to successfully raise funds, ideas often need to be groundbreaking and unique. Misfit is an example of a successful crowdfunding campaign with the launch of Shine – a wearable smart device to track and measure health metrics. After 10 hours of being posted on Indiegogo, the project reached $100,000. By the end of the campaign period, Misfit Shine had attracted a total of $846,000 in funding.
In Vietnam, most crowdfunding campaigns are related to technology, environmentally friendly recycled products, or book publishing.
In fact, this Indiegogo initiative applies to all aspects of life, as long as the idea is feasible and appealing enough to the community.
Two fundraising methods are used: flexible and fixed. With the flexible method, the project owner can still receive funding even if the initial target is not reached. With the fixed method, the project owner only receives funding when the stated goal is achieved.
Those who raise funds will have to pay a portion of the cost to Indiegogo, usually 5% of the total amount received, not including other fees.
The advantage of crowdfunding is that it doesn't require founders to sell shares of the company. Most crowdfunding campaigns are, in fact, in the form of pre-selling a product.
According to experts in the startup field, this method is effective for projects with a tangible product, nearing the end of the R&D (research and development) phase, requiring a certain amount of capital for mass production without needing to raise funds from investors and other funds.
Sonny Vu's crowdfunding campaign for his electric scooter began around May 2021. The plan was for the scooters to be delivered to investors starting in December 2021. However, to date, not many people have received their products. Before being discontinued, the Scotsman scooter campaign had raised nearly $565,000 from over 300 supporters. |
Source
Comment (0)