Crowd funding has recently become one of the most popular ways for inventors, artists, filmmakers, videogame designers and many others to raise money for their ideas and potential projects. Whereas in the past these people would have to turn to investors to fund their projects, crowdfunding allows them to present their ideas to the public in hopes of raising money through incentive-based donations. As crowdfunding grows in popularity, more and more people are turning to it as a potential money-raising strategy to fund their projects. As crowdfunding begins to grow, it raises one big question: does it really work?

 The answer to that question is a bit more complex than a simple yes or no. More factors need to be examined in order to determine its success rate. One of the biggest determinants of a project’s success in crowdfunding is exactly what type of project it is. Some of the most successful crowdfunding projects have been inventions; touch screen watches, iPod and iPhone speaker docks, things people look at and say, “Wow, I want that!” These types of projects are successful because they offer a physical item in exchange for a donation. In a sense, a donator is pre-ordering an item provided they donate enough money. This raises the incentive for the donator to contribute their money, as they will receive something they want in return. It also allows the inventor to circumnavigate investors and retailers, offering their product directly to their customer, the donator.

 Inventions are only one type of crowdfunding project. If the project attempting to raise funding isn’t an invention, it doesn’t mean it cannot be successful; it just means that there are a different set of obstacles to overcome in order to achieve funding. Just as common as inventions are film and music projects. Filmmakers and musicians pitch their projects to potential donators, detailing their dreams and ambitions for their projects. Often times donations of different levels come with different incentives; posters, CDs/DVDs, autographed memorabilia, etc. While these projects can find success, it can prove to be more difficult to raise funding as the project isn’t centered around a physical product; rather, it’s an album or a film, which the donator needs to be interested in listening to or watching in order to put in their money to support the project.

 Many projects of this nature cite successful celebrity projects that raised money through crowdfunding. While these celebrity projects were indeed successful, they many times had what other film projects do not: a fan base. Both Spike Lee and Zach Braff were able to successfully fund their respective projects through crowdfunding. They achieved success, however, because of who they are: Spike Lee and Zach Braff. Each of the two are famous filmmakers, each with their own loyal fan bases who enjoy their films. With a fan base already established, people will be much more inclined to donate to the project of a filmmaker they know and love as opposed to one they’ve never heard of. Now, I’m not saying that it is impossible for an unknown filmmaker or musician to find success through crowdfunding, it just may prove to be a difficult thing to accomplish.

 Crowd funding is without a doubt a very good potential investment strategy for a person with an idea to use, but at its core it is just that: a good potential strategy. Based on the type of project and the people behind it, the person with the idea must analyze all aspects of crowdfunding to determine whether or not it is a smart move to pursue it in order to find funding for their project.