Learn how to use crowdfunding to take your business to the next level, from choosing a platform to attracting interested investors.
Choosing a Platform
The first step to successfully using crowdfunding is choosing the right platform. With so many options, how do you know which one is the right fit? Well, my young financial Jedi, the answer lies in the details. You should consider aspects such as the type of project you plan to launch and the audience you want to reach.
Know Your Project
Before diving in, assess the nature of your project. Is it a physical product, an app, or perhaps a documentary about the art of losing money on Wall Street? Each crowdfunding platform has its specialties, such as Kickstarter for technology and design, or Indiegogo, which seems to accept anything that won’t be thrown out the window.
Analyze the Target Audience
As important as the project is knowing who it is aimed at. If you are seeking support from a group interested in financial memes, you might consider niche platforms like Wefunder, which attract investors with specific interests.
Understand the Fees and Regulations
Each platform has its own costs and regulations. Some sites charge a small percentage of the total raised, while others may take a larger cut. Carefully review the fees to avoid a surprise bigger than a black Monday.
Research Success Stories
Everyone loves success stories, but it is more useful to understand why some projects fail rather than focusing solely on the triumphs. Research which projects have succeeded in your sector and examine what they did well. Remember, success leaves clues, and on the Internet, it also leaves a trail of data traffic.
Notable Examples
For example, Oculus Rift raised over two million dollars on Kickstarter. On Indiegogo, Flow Hive reinvented beekeeping by raising over twelve million. Both examples show what happens when a good idea aligns with the right platform.
How to Structure a Campaign
Now that you've chosen a platform, it's time to structure the campaign. People won't invest just because of your charming looks, so you'll need to entice them with an irresistible presentation.
Define Clear Objectives
A clear objective is half the battle. Set a target amount to raise and the purpose for those funds. Nothing builds more trust than knowing where the money is going. Remember, your investors are not Robinhood and won't throw their money away blindly.
Create a Compelling Story
Narrative is powerful. Create a story around your business that resonates with the audience. Talk about your passion, your motivations, and how your business will improve investors' lives and the world, or at least their collection of useless gadgets.
Unique Value Propositions
Highlight what makes your product or service unique. What do you offer that no one else does? Innovation, risk, a unique twist? Investors are looking for something to believe in, aside from the bright future of Bitcoin.
Appealing Visual Material
Don't underestimate the power of visual appeal. Use high-quality images and videos that draw people in, like those burger ads that never look the same in real life.
Appropriate Rewards
Rewards are the heart of a crowdfunding campaign. Offer tiered rewards that motivate investors to increase their contribution. Remember, a reward too generous could leave you without the necessary budget, while a stingy one could leave you without investors.
Tips to Attract Investors
You have your campaign structured, but how do you attract those investors who are as elusive as unicorns? Here we give you the sharpest tips that not even Cramer would want to share.
Build Anticipation
Launch teasers before the campaign. Build anticipation like a Netflix series before its season finale. Use social media and strategic emails to maintain constant interest and desire.
Create a Network of Allies
Networking isn’t just for carpet sales conventions. Connect with other entrepreneurs and potential sponsors so that your campaign has the support of the community. That network could be the difference between success and a "thanks for participating!"
Transparency and Communication
Nothing kills trust faster than mystery. Be transparent about the use of funds, challenges, and delivery times. Effective communication is your friend, and a common mistake is forgetting about it when the money starts to flow.
Encourage Participation
Engage your future investors with small decisions and surveys. Make them feel part of the process, and they will become your brand evangelists. External opinions are more effective and reliable than any self-marketing opportunity.
Finish with a Strong Close
As Warren Buffet once said, “It’s better to be approximately right than precisely wrong.” Conclude the campaign with a final push that maintains enthusiasm and be sure to thank each investor. A strong close ensures future opportunities and keeps interest in your business venture.
