Crowdfunding - Innovative financing for projects and companies
Crowdfunding, also known as swarm financing or crowdfunding, has become an extremely attractive alternative for creative projects, start-ups and established companies in recent years. Many decision-makers in the fields of finance, business management and project management experience crowdfunding as a flexible, digital way to realise new ideas and obtain capital directly from the community - without having to take the often rocky road to the bank[1][2]. This article shows the opportunities offered by crowdfunding, how it works in practice and how you can successfully get your projects off the ground. We provide practical examples, tips for implementation and categorise current developments.
How crowdfunding works in practice
The principle of crowdfunding is simple: many individuals invest small amounts in a common goal. Online platforms act as intermediaries between project initiators and the crowd. The decisive factor is that it is not a large institution but a large number of people who decide on the success or failure of a project[1][3]. In most cases, a minimum amount is set that must be reached within a certain period of time. If the target is not met, the supporters receive their money back - the risk therefore remains limited[3][5]. Depending on the model, the reward for the crowd can consist of products, exclusive insights, profit sharing or even pure donations[1][3].
A good example: A company wants to develop and test a new product prototype. Instead of taking out a loan, it launches a crowdfunding campaign. Interested parties can pre-order the product before the market launch. In this way, the company generates liquidity, tests market acceptance directly and gains loyal customers who are involved at an early stage.
Another practical example from the digital creative industry: a small studio is planning a new web series, but traditional film funding is not forthcoming. The makers collect a total of 80,000 euros from around 550 fans via a crowdfunding campaign. As a thank you, they receive a personalised signature from the director, an exclusive making-of and the opportunity to attend the casting.
Crowdfunding also has its strengths in the area of social projects: a non-profit initiative wants to start a bicycle workshop project for refugees. Crowdfunding not only raises the necessary funds, but also creates a lively community that supports the project in the long term.
The most important crowdfunding models at a glance
- Classic crowdfunding: Supporters receive a non-monetary thank you, for example the finished product, VIP insights or a personal dedication[3].
- Crowdinvesting (equity crowdfunding): Investors receive shares in the company or project and thus participate in the economic success[3][4].
- Crowdlending: The crowd lends money to the project initiator, which is later repaid with interest[3].
- Donation crowdfunding: Supporters donate without financial consideration, usually for social or cultural purposes.
Crowdfunding as a strategic instrument for decision-makers
Crowdfunding offers numerous advantages for managing directors, CFOs and project managers. It enables quick and uncomplicated capital procurement, strengthens brand loyalty and opens up a direct line to the target group. At the same time, companies can publicly demonstrate their innovative strength and courage to change - a reputational gain that should not be underestimated.
Practical example from the retail sector: A medium-sized shoe manufacturer wants to develop sustainable trainers. He raises 120,000 euros in just a few weeks via a crowdfunding campaign. The first 500 pairs of shoes are sold immediately, the community wants more colours and is even planning a pop-up store. A traditional bank loan would not have generated the same community effect.
Start-ups also benefit from crowdfunding in the technical field. A young company is developing an app to optimise work processes. Crowdfunding not only generates seed capital, but also attracts over 200 beta testers who provide direct feedback. The result is a product that holds its own on the market.
Another example from the service sector: a consultancy for sustainable corporate management would like to develop a new training concept for SMEs. Crowdfunding can be used to cover the costs of development, while the network of potential clients grows at the same time, as many supporters are themselves decision-makers in companies.
BEST PRACTICE at the customer (name hidden due to NDA contract): A start-up from the GreenTech sector wants to develop an innovative system for water treatment in remote regions of Africa. Traditional venture capital is not available and the bank considers the risk too high. Crowdfunding was used to raise the necessary 200,000 euros from the international community. The first prototypes are not only financed, but also tested directly by users. The feedback flows into further development, and the start-up now has successful partnerships with NGOs and public institutions.
Recommendations for successful crowdfunding
If you want to use crowdfunding as an instrument, you should consider a few key factors. A clear, convincing project presentation, a professional campaign with a video and strong story, transparency in terms of goals, budget and consideration as well as active community management during the term are crucial for success[4]. It is also worth choosing the right platform in advance, as each platform has its own target group and focus.
Typical pitfalls are target amounts that are too high, unclear communication or a lack of commitment after funding. If you avoid these mistakes and actively involve the community, you have a good chance of successfully completing your crowdfunding.
Anchoring crowdfunding in management and financing
Crowdfunding is increasingly becoming an integral part of the financing strategy for decision-makers and financial managers. It complements traditional bank loans, venture capital and public funding and offers a fast, flexible alternative, especially when it comes to innovative or socially relevant projects. Many companies are also using crowdfunding to publicise their sustainability strategy and forge new partnerships.
The decision in favour of crowdfunding should always be made strategically. It is worth defining your own goals in advance: Should it be primarily about raising capital, market testing, community building or a combination of these? The more precisely these goals are defined in advance, the more successful the campaign will be.
Support through transruption coaching
Many decision-makers and teams are looking for support when working with crowdfunding for the first time. This is where transruptions coaching comes in: We support you in developing your campaign, help you select the platform, advise you on the communication strategy and follow-up. Typical topics include addressing target groups, risk assessment, budget planning and dealing with critical voices from the community.
Clients often report that they felt overwhelmed during their first crowdfunding endeavour. With targeted support, it is possible to fully utilise the potential of crowdfunding and safely achieve your own goals.
My analysis
Today, crowdfunding is more than just a financing alternative - it is a strategic instrument for innovation, brand development and customer proximity. For decision-makers and financial managers, it opens up new opportunities to react quickly and flexibly to market changes, realise projects and actively involve the community. The above practical examples from various sectors show just how versatile crowdfunding can be. If you want to utilise the opportunities, you should inform yourself at an early stage, select the right platform and make use of professional support. In this way, crowdfunding becomes a catalyst for successful projects and sustainable growth.
Further links from the text above:
Crowdfunding - basics and models[1]
Crowdfunding in the entrepreneur lexicon[2]
Crowdfunding in the Startup Wiki[3]
Crowdfunding on Invesdor[4]
Crowdfunding explained on Bergfürst[5]
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