Over the last several years, many successful business ventures have gotten their start from crowdfunding campaigns. If you have something in mind that you’d like to power through crowdfunding, here are four things you should know before you start.
There’s More Than One Crowd
The “crowd” in crowdfunding is talking about the people who are willing to fund a project, but the growing popularity of this fundraising system has created a crowd on the other side as well. More and more people are squeezing into the picture, creating a lot of noise from ideas that are not legitimate or are unlikely to succeed. Your first job is to set yourself apart from these projects.
Your Success or Failure Will Be Visible
There is a lot of risk in any business venture. When you fund it through your own financial resources, the outcome is privately yours. When you use crowdfunding to make it happen, those contributors will want to stay in touch. If the project turns out well, that will be great, but a poor outcome will make it tougher for you to get funding again. Choose a strong project and work just as hard with other people’s money as you would with your own. It’s vitally important that your research best practices for crowdfunding.
Funding Sources Specialize
The crowdfunding world involves groups of people with many different interests. Some are looking to help people with medical issues, some want to feed entrepreneurs, and others support education. No matter how good your campaign is, it must find the right donors. Research your platform and make sure that you know you’re reaching out to people who are interested in what you are trying to do. Then make your best pitch to them for why you know it will work.
Funders Want Follow-Up
Funders aren’t interested in funding a project and never hearing from the recipient again. They want to know how things are going. Remember that they are trying to get the best positive outcome possible for their money, not just for their own curiosity but also so that they can decide if they want to make more investments in the future. Make sure your campaign keeps in touch with those who made it possible.
Crowdfunding is a great way to raise funds outside the traditional banking system. Projects that would never have made it past a loan officer can get the financial injection they need to become successful. If you’re considering crowdfunding to launch your effort, you need to know how it will work before you proceed.