Only Four Reasons why People Invest Money

There are only four reasons why anyone may agree to “invest” in a particular project – at least according to Danae Ringelmann, co-founder of donation-based crowdfunding site Indiegogo. These “Four P’s” of involvement should remind all interested campaigners what it takes to get funded. But these “P’s” aren’t limited to crowdfunding. No matter how you are raising money, whether for a business or a charitable endeavor, these are the things that are running through the heads of your potential financial backers.

1) Passion

The first “P” is for passion. Stirring the emotions of a potential supporter is the number one way to get someone involved in your project. A potential backer who cares deeply about your goals is much more likely to contribute to the cause.

2) Perks

Everyone enjoys getting something. For an equity investor, the perk may be a dividend. For a contributor to NPR, the perk may be as simple as a free tote bag. Even if the rewards are small, they matter.

3) Participation

Just being involved with a larger community of people is a huge draw to many people. Although you may have a better view of the football game from your couch, there is something about “just being there.” The same is true for backers of the fundraising campaign; they just like being there along with everyone else.

4) Pride

For your supporters, they are proud to be part of your campaign. Although there may be perks, sometimes the most powerful reward of all is simply being recognized on the list of participants. Seeing your success, and the recognition for their participation, gives a special kind of pride that only your backers can enjoy.

Jonathan Frutkin
Jonathan Frutkin is an attorney at The Frutkin Law Firm, PLC in Phoenix, AZ. He’s written a new book called “Equity Crowdfunding: Transforming Customers into Loyal Owners” which was published in May, 2013.

A Shiny New Tesla . . . Museum

CREDIT: Matt Stafford / TechNewsDaily.com
CREDIT: Matt Stafford / TechNewsDaily.com

In 2012, a successful crowdfunding campaign ran on Indiegogo.com – “Let’s Build a G-ddamn Tesla Museum.” While the group raised the money to purchase a property that was used as Nikola Tesla’s former Wardenclyffe laboratory last year, it took until the end of last week for the non-profit group to successfully close on the purchase of the property. The group raised about $1.7 million through the campaign which included a state grant.

The lab was the site of an early 20th century project to build a transmission tower capable of cross-Atlantic radio communication. One obvious restoration idea is to rebuild the 187-foot wireless transmission tower which was torn down in 1917. The U.S. government thought that it was being used by German spies during World War I.

However, the money used to purchase the property isn’t quite enough to complete the science center. The group is beginning to raise money for the public to learn more about Tesla’s scientific work.

By the way, the campaign was completed in 2012 when Elon Musk, CEO of Tesla Motors, ponied up a big chunk of the money to promote his company’s electric cars.

You can read more about the group’s success at http://www.technewsdaily.com/17954-tesla-lab-purchased-with-crowdfunding.html.

Jonathan Frutkin
Jonathan Frutkin is an attorney at The Frutkin Law Firm, PLC in Phoenix, AZ. He’s written a new book called “Equity Crowdfunding: Transforming Customers into Loyal Owners” which was published in May, 2013.

Equity Crowdfunding: Transforming Customers into Loyal Owners

During the last several months, I have been spending a lot of time writing about next year’s biggest marketing opportunity. My book, Equity Crowdfunding: Transforming Customers into Loyal Owners is based on the premise that the power of social networks combined with the passion of business ownership will provide local companies with a way to accelerate their growth.
Equity Crowdfunding Book Cover

I’ve come a long way in my thinking about the impact on equity crowdfunding. At first, I was in agreement with the vast number of people who thought that the provisions of a federal law called The JOBS (Jumpstart our Business Startups) Act were just designed for startups. Like many, I thought that equity crowdfunding was a limited way for startups receive money and validation of their ideas by posting projects online.

But now, it is clear to me that a local small business can turn their customers into something much more than a Facebook “Like” or favorable Yelp review. Instead, the customer could become an owner. And one thing we know about owners: they are evangelists. Owners will go out of their way to promote their own company. This will lead to more frequent business visits, and a much greater use of the social networks developed by each individual customer/owner. Ownership in a local business will serve as a virtual badge representing community involvement for each crowdfunder.

As I was writing the book, we launched our company called Cricca Funding. The company is a consultancy that works with profitable, established local businesses looking to raise up to $1 million online using crowdfunding. But while the law permits equity crowdfunding, the SEC still hasn’t published regulations that will make the law effective.

So why start this business and write the book?

Because I believe that this year is special. Forward-looking marketers will begin to realize the promise of equity crowdfunding. Besides the increasing amount of capital that will be raised for small businesses, the opportunity to transform customers will be extraordinary.

We also think that it is important to be involved as the SEC formulates the regulations that will impact crowdfunded companies. At the same time, we look forward to informing the business community while promoting the marketing impact of crowdfunding.

I would be remiss if I did not encourage you to purchase a copy of my book on Amazon. A link is right here: http://amzn.to/Yo08eY.

I appreciate you following this blog, and I look forward to making connections with those of you who share my vision for this exciting future.

Jonathan Frutkin
Jonathan Frutkin is an attorney at The Frutkin Law Firm, PLC in Phoenix, AZ. He’s written a new book called “Equity Crowdfunding: Transforming Customers into Loyal Owners” which was published in May, 2013.

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