The funding landscape has continued to shift and evolve over time. Traditional funding sources such as bank loans, angel investors, or venture capital still remain as prominent options for many, however, new avenues for startup funding have also emerged. One of the most notable is crowdfunding.
Crowdfunding is a method of raising capital through the collective effort of friends, family, and other individuals. This method allows you to build, showcase, and share your pitch resources in a more streamlined manner when compared with traditional models.
There are many benefits to crowdfunding including improved reach, PR & marketing, concept validation, and more. Additionally, there are different types of crowdfunding options available.
For example, blockchain crowdfunding is one of the newer funding methods to become available. This is where startups can offer their own cryptocurrency as opposed to offering products, which was typical with most crowdfunding platforms.
Equity crowdfunding is another relatively new addition to the crowdfunding world, which was introduced in May of 2016 and allows everyday individuals to contribute financial investments in exchange for company equity.
If you’d like to learn more about crowdfunding and what options could benefit your business or startup, keep reading.
Preparation is the key to launching a successful crowdfunding campaign of any kind. Last year, 6,455,080 crowdfunding campaigns were launched worldwide, but only 22.5% of them were considered to be “successful.” An analysis of those campaigns that were successful shows that extensive preparation long before launch was a common thread.
Here are some tips for preparing a successful crowdfunding campaign:
Know your audience
Before pitching your crowdfunding campaign, you must know who you want to target. You should categorize your target audience from broad to narrow (down to specific individuals) and learn everything you can about them. Some questions to consider include: What are their interests? What other crowdfunding campaigns have they supported? What social media platforms do they use?
Establish a strategic social media presence on the social media platforms and channels that your target audience uses. Match your marketing and content efforts to the information you gathered in step 1.
Produce a great video
The overwhelming majority of crowdfunding campaigns that hit or exceeded their financial targets produced quality videos that told a compelling story and motivated viewers to support the campaign.
Build a solid fanbase before you launch
The most successful crowdfunding campaigns invest time and effort into building excitement and interest before making the ask. You can build a fanbase through social media, by tapping into communities or even by connecting with influential individuals who might be interested in your project.
Build a great website
As people read your content and become interested in what you have to offer, they will want to learn more by visiting your website. The website should introduce visitors to the people behind your company, tell your story and share your enthusiasm.
There are lots of great resources available to help you prepare for a successful crowdfunding campaign. The 5 tips above will help give you a good start.
Blockchain crowdfunding for startups is looking to change the startup funding game. Instead of offering products, as is the norm with crowdfunding platforms such as Kickstarter, Indiegogo, and such, startups can now offer their own cryptocurrency to early investors.
In 2016, Equity Crowdfunding became a new startup investment term. May 2016 bore witness to the third update on the Jumpstart Our Business Startups (JOBS) Act of 2012, with the act enabling Equity Crowdfunding as a much welcome assistance for entrepreneurs and startups seeking investors. In turn, this also enabled people to become small-scale investors – allowing them to participate in the crowdfunding market for potential returns.
Important Industry Happenings
- What Is Crowdfunding? (via Forbes)
- 8 Crowdfunding Sites to Raise Money For Your Big Idea (via Shopify)
- Top 10 Equity Crowdfunding Sites for Investors & Entrepreneurs (via Money Crashers)