The Best and Worst Advice Business Owners Have Heard About Crowdfunding
Now that we’ve given some tips to
investors, it’s time to show crowdfunding borrowers and project initiators some
love. First things first. Make sure you have differentiated your crowdfunding form.
There are three big sections within
crowdfunding: rewards-based crowdfunding, equity crowdfunding, and peer-to-peer
lending. Rewards-based crowdfunding is the favorite for creative projects, from
video games to novels. Through it, you post a project on a platform with a set
amount of funds to raise. You reward your backers in return with anything from
the right to create a new character in your video game or a special short story
emailed to them.
Equity crowdfunding is beloved by start-up
entrepreneurs. Here, you trade investors’ funding with shares in your budding
company. Finally, in peer-to-peer lending, an online platform matches borrowers
and lenders. Borrowers take out a loan for working capital or other business
necessities while investors who had collectively funded their loans earn
interest-based earnings in return.
It is important to separate the three forms
as it helps you choose which crowdfunding platform to utilize. With that out of
the way, on we go to the best advice we’ve had!
This should be mandatory advice when embarking
on any new venture. Specifically to crowdfunding, learn the facts – especially
your target audience. From the website Fundable,
you will learn that the average donor is aged 24-35. More men back start-ups. Whatever
your target segment, tailor your project campaign to them.
Get your finances in order and figure out
exactly how much money you need to ask for. The amount you ask for will be
reduced by platform fees and reward costs. Do the math.
If you are a borrower at a P2P lending
platform, it is imperative to check your finances. Can you afford to take out a
loan? Also, look for a platform you can trust and are comfortable with.
Do not wait to market your campaign at the
Do some pre-launching. Create buzz for your
project weeks, even months before it is launched. Make a blog. Use social media
like Facebook and Twitter to spread the word further. The idea here is to
create anticipation so when your crowdfunding project is set up on your chosen
platform, you already have an audience of likely donors.
Utilize your family and friends. Make them
promise to partially fund your campaign to kick up some steam. If people see
your campaign doing well, they are more likely to invest. Pitching to your
nearest and dearest also has the added benefit of gauging their reactions. If
even your closest relatives seem unenthusiastic about your project, perhaps you
need to rethink your direction.
Be careful not to tell-all! Your brilliant idea might get stolen without
pitch a great story
Crowdfunding is a romantic concept, isn’t
it? Average people like you and me can make innovations and groundbreaking
projects a reality.
Use that! People like to part of something
special. If you are going to start a crowdfunding campaign, chances are you
believe your project is special. Now you need to convince others how awesome it
is! You do this by telling a compelling story. Be genuine. Be yourself. Tell
your audience why you’re so passionate about your project and why others would
want to be passionate about it too.
Appealing to people’s emotion is great, but
don’t forget to back it up with facts. Breakdown how you will use the funds
from your project. Be honest.
This is the time to be creative. Use gifs,
infographics, charts, even prototype samples. Videos are possibly the best
campaign medium. According to Forbes,
videos double the success rates of rewards-based crowdfunding. Do keep your
videos short and sweet. The general consensus is that videos under 3 minutes
are best to capture attention and for social media shares.
Never keep your investors
in the dark
Transparency is key to any successful
campaign. Keep your audience up-to-date on any new developments, good or bad.
Being vague fosters dissatisfied or worse, angry investors. Digital media can
be a double-edged sword and you can bet unhappy customers will air their
grievances on social media. This hurts your image, your campaign, and your
Transparency applies to all forms of
crowdfunding. Whether you are a lone project campaigner or a staff for a P2P
lending platform, building trust is an essential key to any successful