indicatorMoney and Financing

Crowdfunding 101: Are you ready to crowdfund?

By ATB Financial 30 October 2020 2 min read

Traditional bank financing works for many businesses that operate in a traditional manner—but many great businesses have a non-traditional business model. If you happen to be one of those businesses, don’t worry. There are a number of ways to get the money you need to grow your business, let's focus on crowdfunding.


What is reward-based crowdfunding and how does it work?


Crowdfunding is the exchange between you (the entrepreneur) and the crowd (a group of everyday people). There are four main types of crowdfunding—with rewards-based crowdfunding, the crowd gives money to you in exchange for something they will find valuable (typically a product or service). Crowdfunding campaigns set a funding target that you need to achieve within a specified period and different crowdfunding platforms handle this in different ways. The two main approaches are a fixed funding model and a flexible funding model.

With the fixed financing model, you need to reach your funding target or no money is exchanged. Which means all the money raised through crowdfunding would be returned to your backers. With flexible funding you can keep as much as you raise. Platforms that use the flexible model often have much higher fees than those with the fixed model.


Are you and your business the right fit for crowdfunding?


No matter what kind of crowdfunding you may choose, be prepared to hustle and put in the work. Here’s five questions to ask yourself before you take on the challenge:


1. I have a very specific reason for using crowdfunding, like purchasing equipment, launching a new product, or expanding into a new market.

2. I’m not using crowdfunding as a last resort to save my business—I need a boost to get it off the ground or grow to the next level.

3. My business offers awesome products, services or unique experiences that I could provide to the “crowd.”

4. I’m social media savvy and have a pretty strong social presence that I’ll be able to leverage to promote my campaign and build support for my business.

5. I have unwavering passion and dedication for what I do and am willing to hustle hard to do whatever it takes to rush my campaign.


If you answered yes to most of these questions, we think you’re ready! We recommend that you take a deep dive into crowdfunding by downloading the ATB entrepreneur’s guide to crowdfunding.

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