Once upon a time there was only one way businesses were going to raise capital; they would have to latch onto various forms of “official” investment. The likes of personal investors, banks and venture capitalists were some examples but getting these to accept a business plan was easier said than done.
Then, came the era of crowdfunding. While it’s forms can vary, in its very simplest sense it involves accepting investments from the “community”. In other words, hundreds or thousands of people can invest and while they might not necessarily receive any equity, they will sometimes get a small token for their investment.
There have been some marvelous rags to riches stories involving crowdfunding, and it really has become a way for new businesses to kick-start their idea. This might not be the traditional path that you thought of when you set out on your MBA career, but it can now be classed as a common way of raising money and through today’s post we will take a look at some of the best tips to implement if you are serious about pursuing this.
It’s all about the build-up
If you are looking for tips to launch your crowdfunding page tomorrow, unfortunately you are too late. You are going to have to delay things, and create some sort of buzz around your product before it even gets to the product page.
The best-performing crowdfunding pages often have a lot of buzz beforehand. They have an existing fanbase, and it means that they gain transaction on the crowdfunding platforms very easily. If you can build up some hefty social media followings, and get some early contributions from them, you’ll soon find that others jump on the bandwagon much more quickly.
Regular updates matter
Don’t, under any circumstances, make your crowdfunding page stale. When someone commits money, or is thinking about committing money, they want to know that they are engaging with an active business that isn’t going to lose interest.
Even after the campaign has finished, for the purposes of your reputation make sure you update your pledgers – whether it’s good or bad news.
There is more than one way to reward pledgers
There are umpteen ways to reward those who are investing in your business, and the most obvious is equity. Of course, if you have thousands of pledgers, this becomes something of a complex method of rewarding.
This is where you might need to get a little more creative. Let’s be honest, those who have invested $1 in your campaign are unlikely to be expecting to be millionaires from it. Instead, just being beta-users might be sufficient, as they will at least set their eyes on your product before anyone else.
A video tells a thousand words
Finally, if you are going to focus on one element of your crowdfunding, a video is it. This is the element that can convert those “maybes” into the “yes” group. It can explain much more than text or imagery, and can also reveal a personality to the business to prove to those investing that it is in fact very real.