What you need to know before contributing to a crowdfunding campaign
In recent years, crowdfunding has become a popular way for entrepreneurs and businesses to raise funds and has also allowed ‘normal’ people to become micro-investors.
The emergence of Web3 and NFTs has brought about a new era of crowdfunding, where campaigns use utility NFTs to raise funds — this is where SideKick Finance’s Web3 crowdfunding site Jumpstart comes in!
On JumpStart, anyone can raise funds for their new business or project and anyone can contribute. However, what makes us unique is that funds are raised through utility NFTs.
What is a Utility NFT?
A utility NFT is a non-fungible token that has a specific use case or purpose within a project or ecosystem. It differs from other NFTs that are primarily collectibles, with no real-world use.
Utility NFTs can provide access to certain features or services within a project, such as exclusive content, discounts, ownership rights, merchandise, or event tickets (the list is endless).
Contributing to a crowdfunding campaign using utility NFTs
Contributing to a crowdfunding campaign using utility NFTs can be an exciting and rewarding experience, but as with any type of crowdfunding, it’s good to know the risks as well as the rewards.
Here are some factors to consider before contributing towards a crowdfunding campaign on JumpStart:
Conduct Due Diligence
Before putting money into any crowdfunding campaign, it is essential to conduct due diligence on the project and the team behind it. Look for information on the project’s goals, roadmap, and development plans. Check the team’s background and experience in the relevant industry. Look for any red flags, such as a lack of transparency or unrealistic promises.
Since we launched JumpStart we’ve had meetings with all of our crowdfunding campaign creators. We’ve confirmed that they’re real people with genuine reasons to raise funds. Our team is fully doxxed, and we encourage campaign owners to do the same.
A great way to carry out research on a project, especially if it’s crypto-related, is to check out their communities. This can be on any social media platform, and you can join in and see what their current following is like. If they seem genuine and engaged in the business and you feel like you fit in with their vibes, then this is a great starting point!
Understand the Value Proposition
To contribute to a crowdfunding campaign that’s using utility NFTs, you must understand the project’s value proposition. Ask yourself these questions when weighing it up:
- What does the utility NFT provide?
- How will it be used within the project or ecosystem?
- Am I going to personally benefit from the utilities provided?
- Is the NFT providing me with something I will deem as valuable as my contribution?
If you’ve answered all of these and are happy with the answers, then you know your contribution will be of good value to you.
On JumpStart, campaign creators will upload different price tiers for the NFTs, all with different utilities. This allows you to choose a price that’s suitable for you plus utilities that you’ll benefit from.
Consider the Market
Everyone wants to invest in a crowdfunding campaign that succeeds. But how will you know if it will be successful?
Look at the market demand for the project’s product or service. Consider the competition and potential challenges in the market. If you think they are offering something unique, that solves problems, makes life easier somehow, or adds value in to people’s lives, then you could be on to a winner!
Assess the Risk-Reward Ratio
Assess the risk-reward ratio of your contribution to the campaign. Is the potential return worth the risk involved?
One of the biggest risks is the potential for the campaign to fail. In this case, all the money that was contributed towards the campaign will be refunded to backers automatically all through smart-contract technology. This helps to give peace of mind to our backers because it reassures them their contribution will help launch the company successfully and they’ll receive their perks. Or, the campaign doesn’t reach its goal and your contribution is refunded.
Disclaimer: If the company raises all its funds and launches but isn’t successful, then depending on utility rewards, they may not be fulfilled. This is completely beyond the control of JumpStart as we cannot predict whether a campaign will succeed in the long run (as much as we hope that they do). If utilities can be distributed then the smart contracts ensure this will happen due to the code.
Choose the Right Platform to check out campaigns
There are already many mainstream crowdfunding sites that have gained the trust of backers, however, they don’t have the unique benefits of Web3 that JumpStart does!
Although we may be new (Nov 2022), we’ve already gained great traction in the industry, with 9 campaigns live, plus more in the pipeline. We’ve also got two fantastic case studies that you can check out from Shill Team 6 and Signed Trade.
If you want to contribute towards a campaign but have further questions about how our platform works, please feel free to reach out to us via any of our social media channels, or you can chat with our community over on Telegram.
Otherwise, happy contributing!
