What is crowdfunding?
Crowdfunding is a way to raise money for your business by securing a small amount of money from a big crowd of people. It’s an alternative funding option that has grown in popularity over the last decade or so and is especially popular with inventors and entrepreneurs with ideas for groundbreaking new products. There are also some crowdfunding sites for raising venture capital from professional investors.
Sounds easy, right? It isn’t. Crowdfunding is a lot of work. While convincing someone to part with a small amount of cash is easier than asking for a large investment, your project needs to be well planned. It must appear on the right platform and get enough publicity that your target audience becomes aware of your project and feels compelled to participate. You’ll need to work incredibly hard to get it off the ground and keep the momentum up.
Tips for success
Tip 1: Identify the most suitable platform
Not all crowdfunding platforms are the same. Choosing the right platform will require some research. Seek out platforms with similar projects to your own and with an active community of funders. Look at current projects to see how engaged the userbase is.
Popular platforms include Indiegogo, Kickstarter and Fundable.
Tip 2: Choose the most suitable model
Some platforms offer an all-or-nothing model which means if you don’t reach your stated goal, you won’t receive a penny of the funds and they’ll be returned to each backer. This might sound like a scary prospect, but it can actually help to give backers more confidence by reassuring them they won’t lose their cash if your project fails.
Tip 3: Build a community of early backers
Laying the groundwork before your campaign goes live is vital. This is the stage where you’ll spread the word and leverage your existing networks to build a pool of early backers. Those early backers can give your campaign momentum when it first launches, helping to encourage additional pledges. You can build your community by using your existing networks. Spread the word on social media, tell your customers, release a press release to garner media addition and promote your project via your website, if you have one.
Tip 4: Create a compelling project description
You’ll need to upload an introduction to your project when you set up your campaign. This is your chance to build intrigue, create enthusiasm and present your idea in the best possible light. If you aren’t a natural wordsmith, you might want to draft in professional help in the form of a copywriter to get this absolutely right.
Your project description is your pitch. It sells your product or idea to the crowdfunding community, so you need it to paint an irresistible picture and clearly explain the problems your project solves. It should highlight the unique aspects of your concept and overcome any potential objections.
Writing a remarkable, impossible-to-ignore description is much harder than you might think, so give yourself plenty of time at this stage.
Tip 5: Create plenty of videos and images
High quality images and videos are crucial to campaign success. They lend an air of professionalism to your campaign and bring your vision to life. It’s worth using a professional photographer and videographer to get this important component right.
Tip 6: Offer compelling rewards
On sites like Indiegogo and Kickstarter, backers are offered rewards in return for their funding. These rewards can seal the deal and ensure you get the funding you’re seeking so they must be appropriate and desirable.
Common rewards include mentions on social media and company websites, early access, discounts, merchandise and exclusive experiences.
Rewards are often presented in tiers, spanning the spectrum from smaller investments to larger. Your rewards should be tied to those tiers, with the most valuable and covetable rewards reserved for the highest backers. Having a range of tiers is also a savvy way to widen your pool of potential backers, by catering for a wide range of incomes and interest groups.
Tip 7: Schedule regular updates
Once your campaign is live, the real work begins! At this stage, it’s advisable to schedule regular updates. These are posted on the project page and tell backers and potential backers how the project’s going and what’s happening behind the scenes. Be proactive about sharing updates to maintain campaign momentum and build an engaged community of fans.
You can promote your updates via your social media to continually drive traffic back to your crowdfunding project page.
Not sure if crowdfunding is for you?
Crowdfunding can be a fun, creative way to raise funds for your business. It’s a useful way to gauge market reaction to your product, so gives you a chance to get proof of concept or on the flip side – to fail quickly. It can also be a lot of work, there is no guarantee of success and it’s hard to stand out, which means you could put a tonne of effort into your campaign and come out the other side with no cash.
For an easier way to get a fast injection of cash, hit the contact us button. We’re not your typical stuffy lender and we can get you the funds you need in as little as five working days. There’s no credit check, no BS and no mind-numbing forms. Plus, you can be confident you’ll get the money quickly – without having to wait for a 30 or 60-day crowdfunding project to run its course. Give us a call to get things moving right now.
