What is Crowdfunding and How Does Crowdfunding Work (2024)

Are you a crowdfunding novice? Find out more with our interview with a crowdfunding expert.

What is Crowdfunding? you may ask…

Crowdfunding is a way people raise money to fund their start-up or business idea from a large number of people contributing small amount of money in exchange for different rewards.

Ever thought about crowdfunding? The concept has been around for a while now but you may be wondering how it could help you and how does crowdfunding work?

Well, look no further. We have invited a crowdfunding expert to take us through what it’s all about.

Read our exclusive interview with Fiona Brinin-Webb from women-oriented crowdfunding platform the f-crowd here….Hi Fiona and Welcome to Money Nuggets!

You run a crowd funding platform called the f-crowd – can you explain what your site is all about?

f-crowd is a rewards based crowd-funding platform for female entrepreneurs to fund projects, build a client/retail base, create a buzz around their endeavours (charity or sporting) and develop a network of interested and invested people.

How does the F-Crowd work?

Here’s how f-crowd Launches Businesses…

Step 1: Helen is very talented at making curtains. She has done a beautiful job in her own house, and also recently, made curtains for a few of her friends, and her sister in law.

She has a real eye for fabric and helped each of them with their choices of style, fabric and rail. They are all delighted and keep telling her she should set up a business.

Step 2: Helen decides to look at what she would need to buy to be able to start to make curtains on a more commercial scale.

She quickly realises she would need to invest at least £7000 in machines and other equipment. Whilst she would be happy to spend £2000 of her own savings, she cannot justify digging into the family finances to that level.

Step 3: Then Helen finds f-crowd.

Step 4: Here she sees other women setting off on similar ventures with a whole range of different ideas.

She learns how she can both market and effectively ‘pre-sell’ her service by offering a range of rewards, that would enable her to get the money she needs upfront, get started and get herself known.

So she makes a video, explaining her service, including pictures of projects she has completed and her friends even agree to giving testimonials for her.

Step 5: Helen carefully costs and selects her rewards at different price points, detailing exactly what is included and excluded, with varying offers from a kitchen blind to a full length set of living room curtains. She decides to aim to raise £5000.

Step 6: Before she uploads her pitch, Helen speaks to as many people as she can who she thinks might be interested.

Several more friends agree to support the pitch and good old Mum and dad decide they need a new pair of bedroom curtains and will also ‘invest’.

So as soon as she launches, she will have 30% of her funds pledged. She has read that this will really help her success rate.

Step 7: Helen uploads her pitch and after a few adjustments thanks to some suggestions from the f-crowd team, she is off! She emails, texts, Facebooks and Tweets to everyone she knows asking them to look at the pitch, and to ‘pass it on’.

Step 8: 4 weeks later, Helen has £7300 pounds pledged, and her first 2 months of customers booked. Her new customers vary from close friends, to the parents of her children’s school teacher! She’s off!

Why Did You Want to Target Women Specifically? Isn’t Crowd Funding Open to Everyone?

This year, women will work for 57 days “for free” – from now until the New Year. That’s three days more than in 2013.

On average, women earn just 80 pence for every pound a man is paid. Britain’s female labour participation rate is pretty dismal compared to similar economies.

Women in the EU as a whole are paid 75% of the rate of men, and projections indicate it will take until 2075 to reach parity.

Things are, however, starting to change. There are now almost 1.5 million women self-employed which represents an increase of around 300,000 since before the economic downturn.

Between 2008 and 2011 women accounted for an unprecedented 80% of the new self-employed.Whilst women are 51% of the population, we only account for 20% of business owners.

Whilst women are 51% of the population, we only account for 20% of business owners.Click To Tweet

A step change in business formation rates will only come from encouraging more women into business.

When women start businesses they do so under-capitalised, at around one third of the level of finance of men. They are far less likely to use either private equity or venture capital.

Research shows that women are significantly more fearful than men of debt, citing it as the single largest barrier to entrepreneurship.

Women are around ten percent more likely than men to see finance as their only barrier to entrepreneurship.

And to top it all,women’s business loan approval rates are between 15 percent and 20 percent below men’s.

However, research shows that when women do start businesses, they out-perform those of their male counterparts (The Government Equalities Office found that 10% of the female population are thinking about starting up a business which would equate to over 3 million new businesses).

So how do we encourage women to start businesses and to do so at a level of funding that will help them achieve sustainable success?

Women are power-users of the internet and social media and drawing on both of those aspects are naturally four times more successful at crowdfunding than traditional means of fundraising.

Of Indiegogo’s successful campaigns, over 40% are women. Overall, women are 13% more likely than men to meet their Kickstarter goals.

Women run nearly two-thirds of companies that have successfully raised funds on CircleUp, an online platform connecting consumer and retail startups with wealthy individuals known as accredited investors.

Women-led startups have a 70% success rate versus 58% for men, CircleUp says, and receive more page views and more investors, even though there is no difference in revenue size, profitability and other measures of quality.

Studies have shown an 800% uptick in usage when business help is singularly female focussed so that with the fact that women are natural crowd-funders.

We think a female focussed crowd-funding site will help us challenge all of the negative statistics on female entrepreneurs and will enable women to be at the forefront of the working revolution by owning and creating their own future in business.

What Does A Crowd-Funding Supporter Get Out Of The Deal?

Anyone can be an f-crowd Funder as long as they are complying with their local laws. There is a minimum funding level of £10.00.

You will be kept updated of the projects funding throughout its life-cycle. As soon as the funding goal is reached you will be contacted via the email address and you will receive your rewards.

On f-crowd, Founders are given up to 30 days to fund their projects. It is a fixed funding model so founders have to reach their target to receive your funds.

In return for funding your project Funders will receive rewards.

These are key tools in the success of your project and can take different forms from digital (an email, a tweet, a sticker) to physical (your product/service etc).

What Makes A Pitch Successful?

Statistically pitches with a video raise over 350% more than those without.

They need to be under 3 minutes long for maximum views. You will have lost 60% of viewers by 2 minutes so make sure you have an impact in the opening segment.

A successful video is, passionate, persuasive and calls people to action. The heart of crowd-funding is the people.

A successful video is, passionate, persuasive and calls people to action. The heart of crowd-funding is the people. Click To Tweet

Why Is Crowd-Funding So Important To Women in Business and/or Women in General?

The crowdfunding market is exploding. Over 1000 sites have been launched since the first US reward site, Indiegogo started in 2008.

The working world is changing and we want women to be at the forefront of the revolution by owning and creating their own future in business.

The working world is changing and we want women to be at the forefront of the revolution by owning and creating their own future in business. Click To Tweet

We believe that through opening up new ways of working and options for providing revenue streams for women, we will be contributing to the next stage in business evolution.

We believe in the collective powering the individual.

We are women who want to see a different world of opportunities for the younger generation. Through crowdfunding women can achieve their business needs.

We believe that by offering not only the platform, but also the network, peer-support and mentoring that we can achieve by focusing specifically on women’s needs, we can make F-crowd the go-to platform for female start-ups.

Your Turn…

Do you have any questions about crowdfunding? Or has your business taken off with help from crowdfunding? Share with us – we’d love to hear your experiences!

Bio: Fiona Brinin-Webb is one of the founders of f-crowd. f-crowd is a rewards based crowd-funding platform for females to create a buzz around their venture, build a client base, develop a network of interested and engaged people and raise vital funds. For more information on crowdfunding visit the website at www.f-crowd.com

(Photo Credit: Rocío Lara)