Get Your Business Funded: Creative Methods for Getting the Money You Need

Crowdfunding is Different

Throughout this book we have looked at a variety of ways to get people to believe in you and invest in your business—everything from bank loans to partners to peer-to-peer lending. And in every one of those, the person making the investment and commitment of money expects to be paid back with money.

Not here. Crowdfunding is different. With crowdfunding, an individual has a business or project that needs a certain amount of capital to move forward. That aspect is the same. The entrepreneur looks for people willing to take a chance on this vision. That too is the same. But here's the kicker: Instead of getting repaid with cash, the crowdfunding investor accepts some other type of “reward” as payment, in lieu of money.

What sort of reward, you ask? Maybe not what you would expect. Typically, the rewards have something to do with the business or project. A filmmaker looking for financing for his movie might offer a credit at the end in exchange for an investment of, say, $100. A restaurant may name a sandwich after a larger investor in the business. The aforementioned Kieran Masterton tells the story of a woman who needed a new hull for her boat for her trip around the world and promised a postcard from her many stops along the way to investors, and even that worked.

As you can see, this is a creative process wherein the investors appreciate that being repaid with money or equity in the business is not the only way to be rewarded for taking a risk and financial ...