How To Crowdfund Successfully
There are few things in business - or even in life - as frustrating as having a great idea, and not having the money to implement it.
21:18 13 August 2019
Banks are increasingly cautious lenders, and if they can't see obvious merit in an idea, they're unlikely to part with the funds you require to see a project through to completion. Even when they do, the punitive interest rates that often come with large-scale lending often hinder a start-up business beyond the point of comfort. That's where crowdfunding steps in.
With a few notable exceptions, crowdfunding has proven to be one of the greatest inventions of the internet age. Many successful projects would never have made it off the drawing board and into reality if it wasn’t for the financial kindness of strangers on the internet, and it could be the best way to go about attracting finance for your potential venture, too. There’s only one problem with that - because crowdfunding has been so successful, there are now thousands of people trying to persuade people to pitch in for an idea, and cutting through the noise can be difficult.
To give yourself the best chance of success, and getting people excited about your project, there are a few basic principles you should follow. We’ve outlined them below, and we hope they help!
- Sell Yourself
Whether it’s a product, a business, or a charitable cause, the idea behind it has come from you. It’s your project, and you’re the person who needs the money. People need to know who they’re investing in, so tell them. Of course product detail is important, but so is your own story. Make sure your campaign outlines who you are, what you do, and why you’re capable of delivering whatever it is you’re seeking funding for. Include the human touch too - don’t just reel off your qualifications and professional experience; include a biography that lets people know who you are. If people feel like they know you, they’re more likely to trust you with their money. You don’t need to become best friends with everyone who chooses to support your project, but you do need to give them enough of yourself to make a personal connection. A video is often the best way to go about this - speak passionately to the camera about why your idea is great, and people will buy into it.
- Always Explain The Odds
People aren’t stupid, and they won’t throw their money into something blindly. You have to tell them what the risks are, and where your project might fall down. Your initiative won’t be completely free of risk - if it was, you wouldn’t have to crowdfund it, because a bank would have stepped in and provided you with a line of credit. Think of this like mobile slots. If people didn’t know the odds of mobile slots games, they wouldn’t play them. Mobile slots display a percentage which lets players know the likelihood of them making a return on their money, and players will choose whether or not to play that mobile slots based on that percentage. As the very existence of mobile slots demonstrates, people will take a risk if they think the potential reward is worthwhile, but only when they know the risk is there, and what the chances of the reward are.
- Be Beautiful
Rightly or wrongly, humans are attracted by aesthetics. If you have a fantastic technical mind but zero graphic design skill, it’s going to be hard to persuade people to buy into you based on a series of squiggly diagrams and flowcharts. Your project needs to look great. If you don’t have any natural flair for this, consider partnering with a graphic designer or a marketing expert who can bring your idea to life. If you’re trying to create a product, you need a great-looking 3D graphical representation of what that final product will look like. You need a snappy headline, and great advertising copy to use as a pitch. Everything needs to look sleek, modern, professional, and in-tune with whatever you’re trying to sell. If you have a fun idea, make it colorful. If your idea is more business-related, it needs to look classy and corporate. This might be something you have to spend a little of your own money on, but it will be worth it.
- Offer Great Incentives
It's customary to offer your supporters something by way of a thank you. They need to be treated better than the people who simply buy your product or use your business when it's open, because they're the people who helped you get off the ground floor. Having a tiered reward system often works best here - the more people are willing to invest, the larger the reward they'll receive when everything's complete. If you're trying to manufacture a product, it might even be the case that the people who pump money in when it's at design stage get it for free when you're ready to launch it. If it's a business service, could they get that service for free for a period of time - or even forever? Give people VIP treatment, and they'll make VIP investments.
- Set An Upper Limit
Here’s where a lot of people go wrong. A crowdfunding campaign should have a clear and specific target, and yet many people leave them open-ended. That makes people wonder what will happen to any money raised above and beyond the stated target, and the usual suspicion is that you’re going to pocket it for yourself. Having a clear and defined target tells people that your business plan is rigid, and you know precisely how much money you’ll need to get it off the ground. As you get closer to the target, you’ll usually see donations and investments increase as people push to get you over the line. Capping your fundraising goal doesn’t hinder it so long as you know you’ve got your figures right - it helps it.
Above and beyond all that, make sure the that your crowdfunding campaign is a two-way process. Keep people updated at all times, and respond to people when they have questions or have ideas. Sometimes, a potential supporter will have a great idea you’ve never thought of before - and if you implement it, they might provide you with a larger investment than they would otherwise have considered. You’re not an island - from the moment you start crowdfunding, the people who invest in you are your partners. Treat them as such, and you’ll find them to be generous!