Reward-Based Crowdfunding

Overview

Results-based crowdfunding is mostly used by companies who are in their pre-seed to seed stage. The idea is to crowdfund using online platforms where interested funders can make a financial contribution. In return, the funders might either get a small reward or a gift. The funders are usually motivated by altruism. E.g, off-grid companies can organize crowdfunding for buying the technologies. Off-grid solar companies that have done crowdfunding include: Okra Solar, Pollinate energy and solaris off-grid.

Popular crowfunding platform include: indiegogo and kickstarter.

Benefits

• Allows for pre-seed and seed funding for companies
• Faster than applying for other grants.
• Opportunity to engage and buid a exitisting network of supporters

Challenges

• Mostly suitable for early-stage companies or a specific project
• Must leverage existing network and have innovate solutions. Entrepreneuers without existing network might be at disadvantage
• Cost of reward to be considered when they are offered
• Difficultuy to find the right platform - international companies might not be familiar with the local platforms and the international platform may have limited payment options for differnet countries.
• crowdfunding platforms might offer certain payment options eg only credit card - which might not be feasible for all the potential funders.