So, there are many branches of Crowdfunding.
Reward-based Crowdfunding is one of those branches.
Before we go any further, let’s learn some basic terms:
Campaign/Project:
A campaign/project is a finite work with a clear goal that you’d like to bring to life. Think albums, books, films, apparel, accessories, gadgets, etc.
Campaigner/Project Creator:
A campaigner is a person or entity (a business/an entrepreneur/an innovator/a creator/an NGO/ an individual) who starts a crowdfunding campaign to raise funds for his project or product. For instance, an entrepreneur may want to raise funds for their product (say a high-tech bicycle or a solar car), an artist may want to raise funds to get their art book published, a creator may want to raise funds for a cool project, etc.
Backer/Contributor:
A Backer or Contributor is the supporter of a crowdfunding campaign who helps the campaign reach its funding goal by making a small financial contribution to it. In return, the backer gets reward(s) for their contribution(s).
Reward/Perk:
Most reward-based crowdfunding campaigns/projects offer the final product (often at a discounted price in relation to the expected market prices later) as a reward or perk to backers in return for their financial contributions. The number (or potency) of rewards increases with the increasing sums one contributes. While small sums may be typically associated with symbolic rewards (invitation to a specific internet forum/community, a thank you note, etc.), larger amounts allow backers to get the product as a reward with some degree of customisation too.
For example, an author may send a thank you note to a backer who contributes Rs 200 to their campaign. For a contribution of Rs 500, he/she may offer a paperback version of their book as a reward. And for a contribution of Rs 1500, he/she may offer an autographed version of their book as a reward.
Rewards are a creator’s chance to share a piece of their project with their backer community. Typically, these are one-of-a-kind experiences, limited editions, or copies of the creative work being produced.
Now that we know the basic terms, let’s understand how reward-based crowdfunding works, its benefits, and its uses.
So, what exactly is Reward-based Crowdfunding
Under the Reward-Based Crowdfunding model, contributors/backers provide financial contributions to individuals, projects, or companies in exchange for non-monetary rewards or products. The donors receive tangible benefits for their financial contributions to the campaign. In simpler words, supporters receive a reward for backing a project, and the rewards can vary on basis of the size of their investment.
There are two modalities through which reward-based crowdfunding platforms work: first is the ‘all or nothing’ model, and the second is the ‘keep it all’ model. Under the ‘all or nothing’ framework, the campaigners can only get the funds when their fundraising goal is attained. As for the ‘keep it all’ framework, the campaigners can keep all the money raised on their fundraiser irrespective of whether the goal is reached or not.
In reward-based crowdfunding, contributors have the ability to pre-order/pre-purchase the products/services offered by a campaigner. Sometimes, it can even be in the form of tokens of appreciation like a personalized handwritten note. For entrepreneurs, reward-based crowdfunding also serves as a tool to test the future market potential of their products. By taking advantage of the crowdfunding platform’s popularity, a new product will have access to an initial audience. These are people who are most likely to be interested in the product, and if they like the product, they can even help with word-of-mouth publicity.
Reward-based crowdfunding can also be defined as a tool that can support creative projects for artists, creators, innovators, designers, or others who wish to bring their creative/entrepreneurial projects to life.It has also modified how creators interact with their consumers, as many project creators implement the recommendations made by the people participating in the funding. The creators and contributors also use crowdfunding platforms to share creative ideas, search for inspiration and connect with other like-minded individuals. Thus, reward-based crowdfunding platforms allow people to get their creative ideas recognized in a favorable market, where they can receive valuable feedback and support.
How It Works
Through reward-based crowdfunding, campaigners can acquire starter capital and validate their idea and develop their products by tapping into the crowdfunding platform’s network of early adopters. Campaigners get to decide on their fundraising target, create perks to reward backers, and set a campaign deadline.
What is CrowdHive?
CrowdHive is a crowdfunding platform for creative/innovative/entrepreneurial projects. Our projects encompass everything from films, books, and music to art, design, and technology. Everything on CrowdHive must be a project with a clear goal, like making an album or building a gadget. A project will eventually be completed, and something will be produced by it. To thank their backers for their support, project creators must offer unique rewards, often the final version of their product.
CrowdHive (registered as Tuwah Ventures LLP) is a reward-focused crowdfunding platform. On CrowdHive, people can monetarily back their favorite creators/projects and in exchange, receive rewards for their contributions.