Every startup needs to raise capital to get started but taking out a loan or applying for a grant is not always the ideal avenue. By taking a different route, such as crowd funding, it gives you the ability to reach out to more potential clients as well as cutting out the requirements from lenders and corporate investors.
Kind of like running a campaign, a lot of effort and creativity is needed to be successful at raising capital with crowd funding. Below are 5 tips to get you started:
1. Set realistic funding goals. After choosing funding goals, keep in mind that different crowdfunding sites use different models for raising capital. For example, Indiegogo allows backers to keep the funds they’ve raised, even if they miss their funding goals. In comparison, funding on Kickstarter is all-or-nothing. Evaluate your funding needs carefully before you launch your campaign.2. Keep it simple. Sosoka said that his first attempt to explain the concept of SymbeeStars, an intelligent consumer lighting system, was too lengthy and complicated to be quickly grasped by the average consumer. His team pivoted to giving a brief overview of their product and then answering common questions with an FAQ.
3. Plan your direct contact list early. Be strategic in narrowing down potential early adopters of your project. Sosoka explained that because 25 percent of a project is funded by an inner circle of your most passionate supporters, it’s vital to build strong lines of communication early on with early adopters.
4. Start pitching key bloggers before your launch. Sosoka explained that narrowing down influential bloggers can help your project achieve “word of mouse” to drive traffic to your funding campaign. Having the approval of key bloggers in the community can help your project gain traction, but pitching them a story and gaining online coverage can take time. Pitching bloggers before your launch puts your campaign in a favorable position to gain attention early on – which can make all the difference between success or failure.
5. Pay attention to offline marketing tactics. Some of Sosoka’s tactics were creating posters and business cards to distribute to offline contacts. Although people you meet in real life may remember your crowdfunding project, giving them something tangible increases the chances that they’ll take action to help your campaign. Through paying attention to offline marketing, you can open the door to potential investors in your own backyard.
There are several other ways to work crowd funding. Can you share what has worked for you in the past?