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.

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