There’s a little known but certainly real phenomenon in the crowdfunding world. One that surely you didn’t know. It is about private crowdfunding, it’s not something sophisticated or more beneficial. It’s an alternative to obtain financing with crowdfunding but in a different way. Today we’ll explain what it is.

Private crowdfunding: A little-known trend

When we have an idea that we want to finance, we usually don’t hesitate to do it. Especially if it’s crowdfunding. You look for a platform that is to your liking, you record a video, you create rewards… You do all the work that your campaign requires. Especially the one that includes promotion in social networks, public relations, marketing, and so on. Up to this point, we all understand the importance of promoting a campaign.

But now imagine that instead of doing it that way, you do it privately. Namely, you don’t create a massive community of followers but you choose a select but numerous group of people. You don’t publish your crowdfunding campaign on a known platform but on your own. Or on a website that you can develop to your liking for it. In short, you distance your campaign from all kinds of media exposure.

That’s what this is about, what some call private crowdfunding. One example of this was the startup Hours, which in 2015 launched a private crowdfunding campaign through its own website. The whole story is told in an article written by Jeremy Olson, one of its co-founders. Who confesses that at first he was afraid, but surprisingly the campaign was a success. Achieving a total of $39,243.

Even though for many people this sounds like a crazy idea, he explains why they did it. Jeremy expresses that they wanted privacy in order to be able to address their modest but faithful mailing list. They also didn’t want to have to submit to the limits that some crowdfunding platforms usually have. But above all, they wanted to give a feeling of exclusivity to the campaign so that their customers had a special experience.

Hours App Crowdfunding
Hours is a time tracking application for iPhone and Apple Watch. It enjoys a good reputation and is considered one of the best apps of its kind. Source: fivepackcreative.com

Benefits of private crowdfunding

There are many reasons why a company or startup would like to opt for private crowdfunding. One of them, as we explained earlier, is the possibility of avoiding limits. Like the one of some platforms that will only deliver the money once the goal has been raised. Although this is just one of the reasons why a private crowdfunding campaign is more desirable.

Related: Top Commandments of a Succesful Crowdfunding

The second reason is about exclusivity. In the case of Hours, they used this element by sending a specialized email to their customers. Which contained an invitation code that would allow them to access the rewards program. This had a quite clear objective: to turn the campaign into a unique, personalized and exclusive experience for the contributors.

private crowdfunding benefits
Exclusivity is one of the keys to the success of private crowdfunding. With a large base of followers, it’s possible to get a high number of contributions. Depending on the situation.

A third reason lies in the rewards. Again, we must emphasize, private crowdfunding allows you to offer how many rewards you want without any limit. And if we are already talking about an exclusive experience, it’s considerably more attractive. Many startups could use it to offer rewards that couldn’t be offered on a traditional crowdfunding platform.

Related: Everything You Need To Know To Invest In Equity Crowdfunding

Until now, some points that should be taken into account must be clear. For example, running a private crowdfunding campaign involves having an audience. An audience that’s undoubtedly loyal to you and your idea. It also involves using an alternative payment platform to facilitate the process, such as Stripe for example. And also have enough technological resources to create a customizable website.

benefits of private equity crowdfunding
Privacy isn’t limited to traditional crowdfunding, a startup can use it to attract investors through equity crowdfunding. This method of financing allows it especially because it’s more private.

In short, private crowdfunding isn’t necessarily for everyone. It doesn’t guarantee that a campaign will be successful. But if it’s carried out and certain conditions are met, it can be a viable financing option. It avoids the viralization and/or unwanted exposure of a campaign, limiting it exclusively to a group of people. And you don’t have to be a company or finance a business idea to make it work.

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Would you do your own crowdfunding campaign in private…?