6 Ways Entrepreneurs Capitalize on Crowdfunding
Crowdfunding is a revolutionary approach to financing upstart business ventures. In fact, it’s never been easier to venture out into the entrepreneurial world and bring new ideas and businesses to the marketplace.
Crowdfunding offers a revolutionary way to raise the capital necessary while simultaneously testing the marketplace. The crowd’s willingness to invest money provides an informative barometer for the business’s future prospects.
Consider the following list as a starting point for best practices when using crowdfunding to finance your business. Successful entrepreneurs that have already crowdfunded their business use these 6 tips.
1.) Addressing a real problem
Everyone is confident that their idea will change the world, but the truth is many solutions only address idiosyncratic problems. Brainstorm with other people and figure out whether/how your idea can successfully address a problem that exists for a broad number of people. Demonstrating how your business idea will solve a problem will go a long way in raising consumer awareness that will, in turn, lead to attracting the crowd’s investment dollars.
2.) Begin fundraising campaign early
It’s a mistake to think that crowdfunding is as easy as setting up a platform on one of the popular crowdfunding websites. It’s critical to the campaign’s success that you start pitching the business idea long before it graces an Internet crowdfunding portal. Momentum begins with your inner circles. Start by getting your friends, colleagues, and family on board. Slowly build out from your network and have a solid core of supporters before launching your campaign.
3.) Engage with your supporters
Once you have a core group of supporters aboard, make sure they continue to feel like they’re a part of your campaign. Engage with them on social media, email, and teleconferencing. Picking up the phone and making a call goes a long way in keeping your support group connected. Update them with the current status of your campaign and offer them a video or photo that captures the spirit of your campaign. Communicate in any way possible. Your attention to staying connected will help grow your support and foster word-of-mouth referrals that have been proven to grow networks the fastest.
4.) Design, Design, Design
Your brand is going to be one of the most important features of your campaign. The truth is people won’t want to contribute to your business if they feel your branding is not sufficient. Take the extra time necessary to develop a compelling logo and slogan. This will communicate to potential supporters that you’re trustworthy and reliable. The design is a key factor in building your brand’s equity. Make sure it is relevant. If you are new to design, ask your support group for feedback. They will appreciate that you included them and you will gain trust build lasting bonds.
5.) Set a smart goal
There are typically two campaign numbers: how much you would like to raise and how much you need to raise. Make sure that you don’t go through all the effort to raise support to no avail. Additionally, if you set your dollar amount low at the beginning of your campaign it might actually inspire confidence in your venture in the long run. People like to give to successful things and if your project brings in 200% more than originally “expected” then you might end up with more backers in the long run. Ideally, you want to get enough investment to ensure your venture will be successful. Discuss the campaign raise amount with your advisors to ensure your projections are in line with industry standards.
6.) Tell a captivating story
The truth is stories sell. People like to know that they are participating in something that has depth and meaning. The more compelling your story the higher probability that people will fund you. You don’t need to be sappy and emotional, but you do need to express the passion you have for your campaign. You obviously find it important, so make sure others can see how and why it’s important to you.
I’ve encountered several different types of investors. For instance, the two that stood out recently is, what I like to call them, “hard-charging-ROI’er and the other is the Social Impact investor. The hard-charging-ROI’er, cares mostly about return on investment. The social impact investor has a keen eye towards investing in a venture that will make a social difference.
When structuring your campaign, keep your target investor in mind. At Breakaway, we help develop your campaign from start to finish ensuring all the pieces line up in support of a very successful campaign. Indeed we don’t take just any business. We come with a banker’s mindset that helps develop sound investment structures that play a key role in successful campaigns. We also have a capable marketing team that ensures correct social brand legitimacy is developed for optimal success in the marketplace.
Listen in on Investor Roundtables to learn more.
Feel free to contact me and we can discuss this more.
