Seeking funding in order to sell: Crowdfunding as a marketing tool

Websites such as Indiegogo and Kickstarter have attracted much attention for their ability to enable organizations and individuals to raise funds from ordinary people who contribute for a number of reasons. This phenomenon is called crowd funding. Crowdfunding permits organizations and individuals to obtain investments they otherwise might not receive from more traditional sources such as banks, angel investors, and stock markets. A number of now well-known startups had their origins in crowdfunding. More recently, established organizations have begun to use crowd funding websites not only as a source of finance, but also as marketing platforms. In this way, they have been able to ensure a ready market for their new offerings, with full sales pipelines, and to use the platforms as vehicles to boost brand image and gain support for brand-related causes. This adaptation of crowdfunding for marketing purposes is not without its problems, however, and organizations would be well advised to consider not only the opportunities these platforms provide, but also their limitations and risks. (C) 2016 Kelley School of Business, Indiana University. Published by Elsevier Inc. All rights reserved.