Lessons in Planning for Crowdfunding Success
By Francis West on 7th September 2016
With an industry now estimated to be worth in excess of $34 Billion in fundraising volume Crowdfunding has emerged as a popular way to raise funds for a wide variety of projects. Although it sounds straightforward, just how easy is it to Crowdfund your way to commercial success?
What Is Crowdfunding?
Crowdfunding involves using a specially designed Crowdfunding online platform to enable you to raise funds from investor donations for a project or product in return for e.g. being first to get the product, access to unique / personal / special products, equity in your company, and preferable / special rates for products and services.
Different Crowdfunding Platforms For Different Needs and Markets.
There are many different Crowdfunding platforms to choose from and each has a different use. Some of the most popular Crowdfunding platforms include:
- GoFundMe. This very popular and easy to use platform allows you to raise funds for personal or professional projects, takes 5% per donation, is free to the user, and it syncs well with your social media.
- Indiegogo. A platform aimed at fundraising for artists, musicians, entrepreneurs and humanitarians.
- Kickstarter. This well known platform allows users to make pledges towards creative projects but the user isn’t charged until the fundraiser’s pre-set goal for the project is reached.
- Fundable. A platform specially for enabling entrepreneurs raise capital for new businesses in return for offers of equity in the company for the investors.
- CircleUp. This is a U.S. platform to allow online investing in companies.
- MicroVentures. A platform combining venture capital with Crowdfunding for start-ups.
- YouCaring. A platform to raise money to fund personal expenses such as adoption, medical bills, funeral expenses and tuition.
- CrowdRise. A platform with no campaign deadlines or minimum goals that focuses on raising money for global citizenship causes.
- DonorsChoose. A platform to raise funds for underfunded public schools.
- Kiva. A not-for-profit organization that finances loans which are offered at affordable interest rates to low income populations in 86 countries.
Making it Easier.
One of the main things to remember about Crowdfunding is that it shouldn’t be the first part of the process. If you’re thinking about Crowdfunding you will need to have done a great deal of work and planning before considering asking people for money. Here are 10 important pointers to help you to achieve Crowdfunding success:
- Make sure that there is a need and market for your product in the first place. Do your research first.
- Have a great product / offering. Your target market will have to perceive great value for themselves in return for their donation.
- Think Marketing. Be aware that once your project is out there it can be seen be by potential competitors and could therefore be copied. You need to protect the source of your USP and your competitive advantage.
- Keep it simple and clear. Don’t have too many backer levels in your campaign.
- Do the maths. Make sure that the donations will at least add up to covering the cost of your project.
- Have a great story. If you are able to tell a great, compelling story about why people should invest (and have a great campaign video) you will have a greater chance of success.
- Manage investor expectations. Be honest with your investors about their likely return and about the likely outcomes of your project.
- Communicate. It is vital that you communicate frequently and well with your investors during the project.
- Don’t be afraid to get expert outside help. If your project really takes off, one of the best ways to stay on top of it may be to enlist specialist / expert help to mange it well at least for the sake of your investors.
- Share. By sharing and blogging about your experiences you could help other companies who want to use Crowdfunding, and you may even gain some good publicity and create other unforeseen opportunities for your company / yourself.
What Does This Mean For Your Business?
In an economic climate where attracting investment and getting funding is more challenging Crowdfunding presents your business with another opportunity to raise funds for projects and products. Remember that you will need to have done the thinking and planning about the project and its management before setting up the campaign, and you will need to devote time to communicating with and keeping good relationships with your investors, as well as preparing adequately for the possibility of real success.