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Creative Business Financing Techniques - Donations

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One neat thing about helping entrepreneurs fund their businesses is that whenever someone comes up with a cool way to finance their business, I end up hearing about it.

Whether they email me directly, or someone else finds out and lets me know, it always ends up in my inbox. Which is a good thing.

For years, I’ve been keeping track of these emails and stories and have decided to put together a report. The report, which will be called Growthink’s “Definitive Guide to Creative & Alternative Financing Sources” will detail tons of ways to finance your business that you probably don’t know about or haven’t considered.

One such creative financing technique is using donations. Months ago I received an email about a horoscope website, Birdielawson.com, which solicited donations from its visitors. The site has generated thousands of dollars in funding from these donations. And it’s using these donations to grow further.

Another great example of donation financing is FeedDigest. FeedDigest was founded by entrepreneur Peter Cooper in 2004. At that time, Cooper added a PayPal button to his website and asked users of his website to donate money.

His visitors subsequently donated enough money to allow him to start really growing the company. Soon after, an angel investor wrote him a check for even more money. FeedDigest grew and grew based on those investments, and in August 2007 was acquired by Informer Technologies, Inc.

And finally, perhaps the most famous recent example of donation financing is Wikipedia which has raised several million dollars in donations to date.

So, if you have a website (if not, you should create one), one source of capital that you should consider is donations. Soliciting and accepting donations is as simple as creating a PayPal account and adding a PayPal button to your website.

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Richard Ressler says

Thanks for the great article Dave, I just put up a facebook fan site the other day asking for donations to raise $25,000 so that we can speed up our development timeline for a new social game that we are creating for facebook. Since traditional methods of raising capital have not been panning out we thought that we would try to raise the needed funds through donations with the promise of rewarding those who donate with in-game items and a possible return of the donations greater than the amount that is sent. I found your article when I was searching the net to see if anyone else has had success with this approach in the past. Thanks, Richard
Posted at 7:22 pm
Maritza Figueroa says

Enterpreneur at heart. Done the school thing, dead end jobs. But always looking for the opportunities. Don't have a website up yet. But, why not try it. I have been trying to figure out the best way to open a small wine/cafe much needed out in Dela-Where? Need some culture in this area. I am fired up about the idea. Thanks.
Posted at 12:04 pm

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