Crowdfunding is one of the latest trends these days when it comes to opening a venture.
Prior to discussing about crowdfunding let us have a look at some specific aspects.
Setting up a business has and will always be a challenging stuff to go for.
When we first think of opening a business, the first thing that comes onto our mind is the several challenges associated to it.
Starting a venture is not easy and you need to be very careful as well as planned to get it started.
Acquiring funds for your new business is a big challenge and this is where it takes the most time.
However, a lot of credit goes to the internet and several funding ideas that makes the funding process simpler.
Crowdfunding is one of the most prominent and effective strategies to get funding and start your new venture.
What Is Crowdfunding?
Crowdfunding is one of those few effective methods of getting funds for your business with ease.
However, you need have a concrete plan and smart enough to impress people to acquire it.
It is the process of getting funds from many people at once for your venture in return for small rewards.
The best part is that Crowdfunding aids in reaching a vast network of people or potential investors through social media.
Crowdfunding websites helps in binding entrepreneurs and investors together and raise a massive pool of money beyond conventional methods.
With the right set of strategies, you can easily become successful crowdfunding campaigner.
For example, Neil Young, the music legend amassed a whopping $2.4 million in a single day through crowdfunding.
Certainly, there is a star power behind this campaign, but crowdfunding is quickly becoming the core of modern funding.
Although, it has revolutionized the market and start-up world, however, it’s no magic stick.
The success directly depends on the amount of labor you put into your strategies and idea.
Apparently, there are associated challenges, however, if you do your part, you should take no time to succeed.
The key is to convince people in funding your project in returns of promise to pay them some novelty or be a part of it.
Apparently, the most impressive crowdfunding projects make people talk about them and investment continues.
How Crowdfunding Actually Works?
Crowdfunding has completely revolutionized the investment world.
It has poured in a lot of opportunities for budding entrepreneurs to set up their own ventures.
It has paved the opportunity of acquiring thousands and millions of dollars potentially from anyone having money.
Crowdfunding paves a forum for budding entrepreneurs to pitch their ideas to waiting investors and collect funds.
According to stats, the crowdfunding market is about to amass whopping funds within the next few years.
One of the most interesting crowdfunding projects was the creation of a new kind of potato salad recipe.
The person’s intention or goal was to amass $10 in crowdfunding.
However, he eventually ended up with $55,000 from almost 6900 investors in a crowdfunding campaign.
Now, this is a whopping profit and you can imagine how big of a business, he could set up.
Through this campaign, investors can apparently find the best projects or ideas and invest as little as $10.
These crowdfunding websites collects a percentage of revenue from the collected funds as an income.
Examples of Popular Crowdfunding Sites
Crowdfunding campaigns have introduced several brilliant businesses globally and continues to do so.
Two of the most successful crowdfunding sites are Kickstarter and Indiegogo sites.
They are the best platforms you want to be for crowdfunding your project.
People want to invest in these sites hoping to invest in the next big venture and has amassed lot of popularity.
As of the year 2018, Kickstarter is another name for crowdfunding.
It is one of the biggest crowdfunding platform found in 2009, and attracts thousands of investors.
Since 2009, Kickstarter has raised more than 130, 000 campaigns, and collecting funds worth more than $3.5 billion.
On the other hand, Indiegogo started initially as a site to raise funds for independent films.
However, post a year to its launch, they started putting up all kinds of projects to crowdfund.
Indiegogo is considered to be a more flexible as well as lesser strict site compared to Kickstarter.
Indiegogo offers investors the freedom to have control over flexible or fixed projects.
This distinction is probably the biggest difference between both the sites.
Kickstarter only release the funds when the goal is reached.
However, Indiegogo lets you have the funds as soon as it is put up or you can even wait until it’s over.
All you need to do is ensure your plan is concrete and there is innovation in your project.
Successful Crowdfunding Companies
Crowdfunding has given birth to several companies over the years and they have been all successful.
Companies that were funded on Kickstarter have all become successful and profitable ventures.
Oculus VR, a US born virtual reality product was funded through the site, Kickstarter.
Palmer Luckey, in 2012 started a campaign on Kickstarter for virtual reality headsets for video gamers.
Though the original goal was for just $250,000, it successfully raised $2.4 million in funds.
In the year 2014, at March, Facebook bought Oculus VR for $2.5 billion in both cash and stocks.
One other example of successful Kickstarter venture is M3D.
M3D is a company that manufactures 3D printers and was founded by couple friends.
In the year 2014, Michael Armani and David Jones, the founders, raised a whopping $3.4 million for their company.
This was a very successful Micro 3D printer company funded from Kickstarter.
Their 3D printer that comes with several durable 3D inks can be found on Amazon, Staples, Brookstone etc.
Now, they are apparently making $10-15 million in sales.
How to Start Your Crowdfunding Campaign
Crowdfunding is a very tactical project and requires the best and proper strategies.
There are several ways how you can start your crowdfunding campaign, however, here are a few of them.
1. Choose a Platform
Platform plays a crucial role in setting up a successful crowdfunding project.
If you are unable to choose the right platform, then your project may not be successful.
Some of the best sites are Crowdcube, Crowdfunder, Kickstarter and Indiegogo.
Hence, go for the best and right platform, then set up your crowdfunding project.
2. Pitch an Enticing Idea
This is one of the most crucial steps of your crowdfunding project.
You need to pitch innovative and enticing idea to the potential investors if you want to be successful.
Always keep in mind that to get the attention of potential investors, you need to have a short as well as snappy pitch.
You also need to ensure that some images or video is linked with your idea so that the investors can understand and know it.
This will help you in standing out from the rest and be unique.
3. Promise Good Rewards
Rewards is an important part of your crowdfunding project since this is what would attract investors.
Investors are always attracted towards rewards and you need to make sure that you are good at it.
Rewards apparently depend on the amount of investments, the investors make.
However, you need to ensure that the rewards are enticing.
A simple ‘Thank You’ isn’t going to suffice and hence, you need to offer them something useful.
You can offer them access to your products, services, other discounts, some goodies and many more.
Ensure they are inclined towards your rewards.
They need to realize that they are getting something useful for their investments.
4. Few other Tactics
a. Keep Diverse Investment Levels
You need to keep in mind that different people would invest differently.
A section of people would want to make smaller investments, while a section would invest big.
Your rewards should depend on how much they are investing.
Therefore, ensure that you propose them distinct investment levels to make your project successful.
b. Make your Project Easily Shareable
Making your project easily shareable and accessible should be your primary goal.
A successful crowdfunding does well because the investors are excited about it.
They are excited about their investments and love being a part of something big and new.
Hence, they often adore sharing those with other people and letting them know.
Therefore, you need to ensure that your project is easily shareable on social media and other avenues.
c. Let People Know
Regardless of how good your idea is, if you don’t tell people, nothing is going to happen.
If people doesn’t know, how will they make investments?
Hence, you need to ensure that you are getting the word spread out.
Make use of social media, networking etc to share and always update your investors on the progress.
Do you have a good news or reached your goal?
Instantly let people and investors know about that.
This will help them share it with others and as a result, you are conducting a free marketing for your campaign.
d. Avoid Playing Long Game
This is a strict No-No for a successful crowdfunding project.
You might come into the conclusion that the longer you keep a campaign open, the better it is.
However, this is wrong.
According to the site Kickstarter, longer campaigns are not likely to be successful in their goals.
Stats show that the most funds arrive on the initial days of your campaign, hence no point of wait.
The middle days always bring a lull in donations and then again goes up during the last days.
Making your campaign shorter would decrease the lull period between the initial momentum and final one.
Keeping shorter campaigns help you in collecting the funds faster and get going with your project.
Always Be Realistic
When you are into a crowdfunding project, being realistic is always the best weapon.
Access properly how much funds you need for your project to get started.
Most entrepreneurs fail to access this and they overestimate the amount.
This happens because they never researched how much their startup would cost and hence, they fail.
Do you part before your campaign and figure out all the expenses.
Always try to get the real figures and then you can adjust a little.
Overestimating will not help and will eventually make your campaign unsuccessful.
Estimating properly will help you achieve your goal and make your campaign successful.
Estimate everything properly from the start of the campaign to delivering the first product carefully.
Prepare Yourself for Success
This might sound a bit awkward, but is extremely important.
You need to prepare yourself for success and do it wisely.
If you are creating a product that you can’t produce, then there is no profit.
You need to ensure you can manufacture the product in reasonable time, within budget.
You also need to ensure that the product is going to fetch your profit moving ahead.
This is because investors would be looking forward to receiving profits and that’s why they invested.
Consult with other business owners on the same niche and ensure that your product is worth it.
Launching your new campaign always sound interesting but you need to do your part of research.
Never fall short of commitment and always create a product that you can manufacture and fetch profits.
Is It Possible to Be Successful?
Although, it is true that not all crowdfunding campaigns can be successful, but majority does.
Even some of them can fetch funds higher than they ever anticipated.
For example, Emma Watkinson, founder of Silkfred, an online fashion retailer amassed €180,000 from Crowdcube.
Following her success, another entrepreneur Kelvin Dodds amassed €67,000 from Kickstarter.
He founded a funny product named Sugar skull Spoon despite of his goal being €3000 for his venture.
Hence, it is very important for you to be successful, you need to pitch an impressive idea.
You always need to be very creative and unique if you want to be successful in your campaign.
Hooking the investors is very important and you can only do that when you are creative enough.
Rewards as mentioned are important too for bringing in the notice and interest of the investors.
A successful campaign doesn’t come in a single day but with due diligence and hard labor.
Ensure you leave no room for errors when you create the campaign.
You should not wait too long to start a campaign for your crowdfunding.
At the same time, you should never hurry in for the campaign without collecting the necessary details and information.
You can get easily buoyed by creative ideas, enthusiasm etc, but never miss the hurdles.
You should never ignore the logistics, costs associated and all other factors, if you want to get successful.
Most fail due to the improper calculation of logistics.
You are ready for creating a product and prepared to make 100 of them.
What about then there is a 20% or 30% or 80% rise in your sales?
How would you fulfill that demand since you were up for 100 but not so many?
Here comes the importance of proper calculation of logistics and associated details.
Do your diligence properly and no one can stop you from creating a successful crowdfunding project.