Crowdfunding Explained With An Example
Published in
3 min readJan 10, 2018
- Suppose that there are 4 projects in front of you, with different features.
- You have Rs 500 as an accessible money.
- Each project has a set target of funds and we will see whether they reach the target or not.
Project 1: Making a rotating fan
- An experienced mechanical engineer in Nepal wants to make rotating fans in Nepal
- He is 45 years old and is currently working as a government employee
- He has no experience of business before this, but he has technical experience that fits it
- His target is Rs. 1000
- Benefit: funding people will get a 35% discount in the market price of the fan
- Risk: Possibility of delay in manufacturing due to low experience and no quality guarantee
Project 2: Bringing Apples from Jumla
- A 32 year old young businessman who has been involved in the agro-business for a long time wants to make his biggest bet ever, by bringing a 500Kg container of organic apples from Jumla.
- He has successfully paid his loans in the past
- His target is Rs1000
- Benefit: members will get coupons to the apples of definite weight which will be 30% cheaper than market rate
- Risks: Some quantity of apple may get damaged while transporting, which may not ensure that the obligation to all might be fulfilled
Project 3: Restaurant Marketing
- A restaurateur wants to expand his restaurant and also market his restaurant which isn’t getting enough attention
- He hasn’t been able to pay his past loans
- His target is Rs. 500
- Benefit: He will give certain number of free food coupons to people who will back the project
- Risks: He may not expand the restaurant at all and simply give cheaper quality free food
Project 4: 6 pack pills
- A person who has sold different medicines on the road says that he has the formula for a medicine, the regular consumption for 3 months will bring 6 packs without exercise
- He has been selling such medicine on the streets for many years
- Target is Rs.500
- Benefit: Backers will get a preset amount of pills home delivered
- Risks: Not sure of the end result
What’s the result?
If you are more into getting abs you will definitely try to fund the 6 pack pill project. What I am trying to say is, people back the project that they can relate with.
As you can see here, there is no monetary return in the money you contributed because it is Reward Based Crowdfunding. People contribute money in Reward Based Crowdfunding because they want to get the product in cheaper price or they want to buy an experience.
- Rational decision and projects with realistic returns and acceptable backgrounds give better results.
- Risks are there in all projects, but when smaller amount of investment will be done from many, the risk will be lower.
www.grasruts.com is a crowdfunding platform for Nepal. If you want to know more please do contact us through our social media.
