As the popularity of crowdfunding grows as a source of business capital, more and more entrepreneurs are throwing their hat into the crowded funding ring in an attempt to secure funds for their businesses. And why not? The prospect of avoiding an expensive business loan by convincing strangers to hand over their cash by the fistful in exchange for cheap perks--what entrepreneur wouldn't at least give it a try?
But with new businesses launching crowdfunding campaigns every day, it's getting harder to hang onto donors' attention. If you fear getting lost in the shuffle, here's how to make your venture shine above the rest.
Have a Solid Plan
First and foremost, you'll need a great, exciting idea, along with a detailed, viable plan for how you're going to make it happen. Particularly for a business crowdfunding venture, your consumer-investors want to know that you have considered every obstacle and have what it takes to make your plan happen.
Explain to potential donors exactly how much money you need, what you will do with the funds, and how you plan to use any additional funds raised beyond your initial goal.
Just as you would for a business loan application, include a budget and expected timeline for your project, along with detailed information about your industry, competitors, marketing strategy, and any other information that may be relevant to your success.
The more informed and professional you appear as you launch your campaign, the more likely your supports will be to believe in and rally behind your cause.
Tell Your Compelling Story
Beyond the nuts and bolts of your business plan, the human story behind your project is what will make you stand out from the crowd.
Why are you passionate about your business venture? Who do you want to help? What do you want to achieve? What makes this particular project important to you?
Share a narrative with your potential investors about how you arrived at this point.
What efforts have you already put into this project? How will your life change if your campaign is successfully funded?
Remember that a fair number of crowdfunding contributions are "impulse buys." A genuine, heartfelt story will grab your audience's attention and compel them to contribute to your campaign.
Choose Your Platform Wisely
Just like your lipstick color, or your choice of boxers over briefs, the crowdfunding platform you choose reveals unspoken truths to your potential supporters about the nature of your project
If you launch your campaign on IndieGogo, for example, you'll be joining the ranks of your guitarist friend from college who asked you for fifty bucks to record his EP.
HINT: If you go this direction, be prepared with a highly professional business plan, solid market research, and pristine accounting documents that give an accurate depiction of your company's financial standing. An equity crowdfunding pitch should be just as detailed and solid as a fundable business loan application.
Kickstarter is the original and most middle of the road of the crowdfunding platforms--but with such a wide array of campaigns launching every day, it's an easy place to get lost in the shuffle.
Each of the many crowdfunding platforms out there have strengths and weaknesses that best fit different types of funding ventures. Do your research and find the platform that best suits both the needs of your project and the personality of your brand.
Fundraise Offline First
In the weeks before you launch your crowdfunding campaign, share with friends, family, and your business network about your project and funding goal. Acquaintances and donors outside your network will be less likely to contribute to a campaign with a zero balance, so you'll need a head start from people who know you well.
Having an investor signed on to match contributions from your crowdfunding effort is a great way to rally support and make your campaign stand out. Knowing that a savvy investor believes in your cause may help to convince would-be contributors of your project's merit.
Ask for the Minimum You Need
Of course, you're likely launching your crowdfunding campaign with an ideal dollar amount in mind. But when you go to actually set your initial funding goal, start with the lowest possible figure you could manage to make even a scaled back version of your business plan happen.
Obviously, the first reason for this is that if you don't hit your funding goal, you won't receive any of the funds pledged by your crowd. But that's not the only reason to lower your funding bar.
It's a common misconception among crowdfunding newbies that once you reach your funding goal, people will stop donating. But as it turns out, people seem to love contributing to campaigns that are already fully funded. Think of it as the "everybody's doing it" principle--when on the fence donors see that you've reached their goal, they're more apt to join other supporters in the excitement of a new venture.
Find Your Influencers
No matter how great your business plan is, your crowdfunding campaign will go nowhere without support from an initial group of loyal champions to rally for your cause. Of course you and your colleagues will be singing the praises of your project and encouraging your networks to contribute, but how could you extend that reach?
In the early stages of your fundraising effort, seek out influencers who can serve as your funding ambassadors. The best asset in your social network may not be your friend with the most substantial trust fund, but rather the one with the biggest digital footprint who is willing to spread the word over social media about your crowdfunding campaign.
Always Follow Through
This part can't be stressed enough. It is so important that you follow through on your crowdfunding campaign, both by delivering on any perks you've promised, and by wisely using the funds you've raised to make your business plan happen.
Your accountability in following through on your campaign impacts not just your personal and business reputation, but the reputation of crowdfunding as a whole.
A donor who contributes to a campaign only to watch the creator bail on the project is far less likely to ever contribute to another crowdfunding campaign in the future. So don't ruin the chances of future entrepreneurs to see their own campaigns successfully funded.
Of course, in business and in life, things don't always go according to plan. Challenges come up and your business plan may not happen as simply as you imagined. One thing I love to see is entrepreneurs that address "What could go wrong?" head on, and lay out all of the potential issues that could hold you back with answers regarding how you'd combat them. This demonstrates that you'll be ready to proactively roll up your sleeps in times of struggle.
If you face delays in meeting your campaign goals, Kickstarter recommends that you use the Project Updates function to start a dialogue about your process with contributors in a transparent way. If you're honest and sincere, you may be surprised how understanding and supportive your donors will be. Let them know that you are doing your very best to put their hard earned money to good use.
Sincerity and Transparency
Through every step of the process, the two biggest keys to a stand-out crowdfunding campaign are sincerity and transparency.
Sincerity in sharing your mission and why it's important to you. Transparency in explaining exactly what funds you need and how they will be used. Sincerity in sharing your journey if you hit roadblocks along the way.
Of course, there are plenty of gimmicks and perks you can offer along the way that may boost your contributions by a few bucks here or there--but ultimately, your genuine passion for a great idea is what turns on the fence donors into champions for your cause.