These days, many startups are turning to crowdfunding strategy for funding their business. Here are the top tips to successfully crowdfund a project. By implementing the top strategies for effective crowdfunding and fundraising, you can find support for kickstarting your business in no time at all.
What is crowdfunding for small business? It’s nothing but crowdsourcing of funds. The masses chip in to help you achieve your business goal. Crowdfunding involves getting funds from the masses.
As an aspiring entrepreneur, you can use this strategy to get support and funds for your business through crowd funding platforms.
Crowdfunding has been very successful in raising capital for many businesses. In fact, in 2015, crowdfunding was responsible for raising around $34 billion, double the amount raised in 2014, so it seems to be increasing in popularity.
Is Your Business Suitable for Crowdfunding?
Though any business can benefit from startup funding of this kind, there are some models that are ideally suited for this strategy.
- Raising funds for publishing books. This is doubly beneficial because you can pitch your book to readers directly without having to go through publishers or agents.
- Interesting and original tech gadgets.
- A local business. You can build your client base even before you open shop.
In short, any business idea that is original, unique and interesting can stand to benefit from crowdsourcing.
Top Benefits of Different Models
There are different models like equity crowdfunding and so on.
- Get funds easily for your startup or business.
- More visibility with crowdfunding for startups.
- Increased client base.
- Arousing interest amongst potential investors.
- Media interest. Your product/service could be featured in a blog or a website. This increases brand awareness among potential customers. Thus, your crowdfunding strategy has resulted in a marketing strategy as well.
- Getting pre orders for your product/service.
You just cannot go around asking friends, relatives and acquaintances to lend you money for your startup. It’s too embarrassing, not to say, unprofessional as well.
A crowdsourcing platform offers a common spot for sharing videos, materials, explaining your goals. Of course, you may have to pay a fee while accessing the top crowdfunding platforms.
So now that you’re convinced about the soundness of a crowdfunding strategy, how do you select the right crowdfunding platform?
Tips for Crowdfunding Success
In a normal conversion, customers receive your product/service immediately when they pay for it. In crowdfunding, there isn’t even an end product visible at the time of funding. Hence, you need to convince people to support you financially for something that they might receive some time down the line.
Here are Steps to a Successful Crowdfunding Campaign
#1. Research Before Trying to Raise Money for Business
- There is the all or nothing model and a flexible model for crowdfunding companies.
- While considering crowdfunding ideas, select a crowdfunding platform that suits your project goals.
- Check out the community or the number of members in it who might be interested in crowdfunding for investment, the fees for the platform, etc.
- Check out the crowdfunding model and conditions.
For instance, some platforms offer fixed funding models, and insist on reaching goals within the stipulated deadline otherwise you’re not allowed to keep the funds that you raise. In a flexible model, you can keep your funds even if you haven’t met your goals, though you need to constantly be in touch with your backers.
#2. Niche Platforms
A big and popular platform like Kickstarter may not always suit your purpose. Check out niche crowdfunding platforms that suit your specific industry and goals. If you select a general platform, you may have to go through thousands of searches to find the right one, whereas a niche site delivers what you need upfront.
- Select a platform tailored for your specific needs with close knit communities for your startup fund raising campaign.
- Financial backers are more aware of the campaign and the trust level is increased.
Tip: For instance, Cruzu is a niche platform for wine making, so it’s easier to find people interested in wine-making products/services on this platform.
#3. All or Nothing Model: Best Way to Crowdfund
- Investors are more confident about giving their money for your project in this model, as they don’t have to worry about the project not taking off.
(Research shows that All or nothing models attract 188 backers on an average, compared to 73 for the keep it all model)
- Businesses are also more likely to hit their goals.
(Research shows that 34% of campaigns of the all or nothing model were completed compared to 17% of the flexible or ‘keep it all’ model)
#3. Email Outreach Strategy
It could spell the difference between success and failure for your campaign!
- Get an email list of friends and family, as they are more likely to be your backers.
Tip: Add a personal message when you send an email to this list.
- Build another email list of potential supporters.
Tip: Offer some rewards or incentive in emails. For instance, include a discount voucher or offer some exclusive or high value downloadable content. Use CTAs to drive such traffic to your landing page on the crowdfunding platform.
#4. Social Media
- Focus on channels where you have more followers and where you are likely to find your target supporters.
Tip: Facebook and Twitter are generally the most popular ones due to the reach and interactivity levels.
- Use hashtags to make your post unique. For instance, Shower Strike makes use of the #showerstrike making it easier to discover and create brand awareness.
- Create a FB page for your campaign.
#5. Using Videos for Your Pitch
- Utilize the power of videos, as it can increase your success rate by 50%.
- Transmit your information more quickly and effectively.
- Increase conversion rates.
- Sight and sound is more effective as a medium for connecting with the viewer.
#6. Offer Rewards
- Offer a rewards program, such as pre orders for the app.
- Send tokens of the development process.
- Invite backers to visit your set up or for a coffee.
If you’re a newbie to the business world or just setting up your startup, crowdfunding is the way to go. Your business is too new for angel investors or venture capitalists to be interested in it.
For instance, if you are just starting a cupcake bakery, you don’t need $30 million to start it. But you’ll surely need initial capital of a smaller range.
That’s where crowdfunding could be the way to go. Instead of relying on one person to support your business idea financially, you can get a whole lot of people interested in it.
- Understand the types of crowdfunding and select one that suits your project.
- Learn the guidelines of the platform you choose.
- Create a good marketing strategy.
And you’ve secured the best chances of achieving your goals! All the best!