You have an idea. You’ve got a dedicated team. You’re ready to take the next step in your business start-up. Here is a checklist of ways to improve your crowdfunding campaign listing to guarantee its success.
With the recent success of sites like Kickstarter and Indiegogo, crowdfunding is taking centre-stage as an alternative to loans and capital markets. In the right circumstances, it creates a win-win situation between small businesses and investors. It’s also a great way for business-startups and entrepreneurs to reach out to a wider audience and to generate interest in their brand.
Here are tips for a successful crowdfunding campaign:
Choose the right type of crowdfunding
When you are planning a campaign, you will need to choose a platform and a type of funding. There are two main types of crowdfunding:
Rewards crowdfunding is where you can pre-sell a product or service to launch a business concept without giving away shares or increasing debt.
There are also specialty platforms that cater for music, design, non-profit organisations and healthcare. Platforms like these have an existing community of members and the platform has been designed to cater for that specialty.
Bear in mind that different platforms have different funding policies. You have to meet 100% of your funding goal in order to keep your funds on Kickstarter, whereas on Indiegogo, you can keep your funds regardless of whether you meet your funding goal.
Equity crowdfunding is where you seek credited investors to become shareholders in your business, for a potential future return. For example Crowdfunder, Circle Up, and Venturecrowd.
These types of platforms may take a percentage of your funds raised, and they may have monthly fees.
You will need to choose the right type of crowdfunding campaign depending on your business and your product or service. Check out this tool to find the right crowdfunding platform for you.
Plan all the stages of your campaign.
Your results are relative to the amount of effort and attention you put into your campaign.
You should have a concrete business plan and a team for marketing and outreach prior to launching your campaign.
Typically a campaign runs in phases. The campaign starts, picks up momentum, reaches a plateau and then closes. A successful campaign picks up momentum quickly from the moment it’s launched, and then sustains momentum throughout.
You will need a strategy in place for how you are going to launch your campaign, your funding targets, and your marketing. You will need to plan your marketing and outreach to ensure that you increase momentum until your campaign reaches a close, with 100% or more of your funding goal reached.
Here is a tool to increase your publicity prior to launching your campaign. Ensure that you have done enough marketing prior to launching.
Have realistic targets.
Have a clear target in mind. In rewards-crowdfunding, determine your minimum pledges, your rewards and how many pledges you will need to reach your goal.
In equity crowdfunding, consider the minimum pledge and your desired goal. Investors are more likely to fund your product if there is less risk involved for both parties, and the certainty that the funds will be effectively used to make your business more profitable.
Also consider that there are other alternatives to raising funds to meet your funding targets. You can opt for a smaller crowdfunding target and supplement it with small business finance if you don’t have the necessary marketing in place to reach enough people. Remember, always minimise risks, increase chances of success.
Make an effective pitch.
All good businesses starts with an effective pitch. Make a compelling case about your product.
You need to make people interested in your product by telling a story about yourself or your business, and why your product can make a meaningful contribution to people’s lives.
Tell a sincere and genuine story which will grab the attention of the audience and pull them in.
Make the perfect pitch that will grab the attention of investors from the get go.
Generate credibility and trust.
Have a detailed plan of how you are going to use investor’s funds to help your business. The more information you provide, the more investors will trust that you will deliver on your promise.
Have a strong online presence. Create videos and online content that show your success as a business or the success of your product and upload this to social media as campaign progresses.
Investors are looking for huge rewards with minimal risk. Focus on what the investor is going to get out of investing in you: perks, rewards, or profits.
Have rewards that people will be excited to have, or shares that are valuable because of the certainty of high returns. The more information you provide over the certainty of returns, the better.
Continue to engage with your investors by keeping them in the loop of new developments as your business progresses.
Create a network of supporters.
Reach out to family and friends and gather a network of backers prior to launch.
Build a list of contacts who are ready to back you from the moment your campaign is launched. Having people who are ready to invest in you guarantees that you generate momentum in the campaign’s early stages.
Campaigns that accelerate early on and increase their funding percentages in a short span of time tend to attract more attention than one that has a slower momentum.
Make it easy for potential investors and existing investors to contact you so that you can still gather funding after the campaign comes to a close.
Engage with social media to build up a following and engage with journalists and bloggers to make your business go viral from the moment it’s launched.
Indiegogo have created a list to increase your outreach here.
Crowdfunding is a great alternative to generating funds for a business that is looking to take the next big leap forward. Done right, you will have generated interest in your emerging business and in your product or service, while also generating the funds you need.