Rewards-based crowdfunding consists of individuals donating to a project or business with the expectation of receiving a non-financial reward in return, such as goods or services at a later stage.
A common example is a project or business offering a unique service (rewards) or a new product (pre-selling) in return for investment.
This form of crowdfunding allows companies to launch with orders already on the books and cash-flow secured (a major issue for new businesses) and gathers an audience before a product launch.
An example would be to crowdfund to print a book or record an album. The costs of the printing (or recording) would be covered by the Rewards offered in the Campaign.
Usually this would also represent better value for supporters as they would get the book (or music tracks) at a cheaper cost then the retail price once it is published.
...Funds given don't have to be repaid; you just deliver the service or the goods promised
- Funds given don’t have to be repaid; you just deliver the service or the goods promised.
- Orders are secured before the launch of a new product, and the crowdfunding campaign allows you to build your customer base as you raise funds.
- You are obliged to deliver on your promises on schedule.
- It is a popular option for startups and entrepreneurs as it provides a way to fund the launch of new companies or products.
- It is particularly suitable for products and services that either are innovative or garner high levels of consumer attention.
- Complicated concepts or products are less suitable for rewards crowdfunding.
...Complicated concepts or products are less suitable for rewards crowdfunding!