How to successfully crowdfund a business
Indiegogo has helped fund businesses from the Cat Café in London to the gravity light and a film starring Benedict Cumberbatch. Co-founder Danae Ringelmann explains how to successfully crowdfund a business idea.
More and more, crowdfunding is becoming the business world’s incubation platform — they’ve turned out to be excellent bedfellows. Merit-based platforms like Indiegogo provide an equal-opportunity environment for businesses (as well as causes and creative projects) to receive funding based on their strengths, relevancy, and ability to connect with like-minded audiences around the world.
As regular startup loans are becoming fewer and further between, crowdfunding is an increasingly popular alternative to traditional funding that not only enables you to retain complete control of the funding process, but also gives you valuable market insights at the same time.
Perks-based crowdfunding allows anyone who likes your idea to contribute even small amounts of money in return for a small perk or reward, making them feel part of something they care about. They receive the pride and satisfaction of “owning” a part of something larger than themselves, and the perk gives their contribution life beyond their dollars. For example, the 6,219 funders that contributed nearly £400,000 to London-based GravityLight did so to support the passionate creators and participate in bringing a safe lighting source to the developing world — while, at the same time, receiving a cool gravity-powered light.
For the up-and-coming entrepreneur, the real beauty of crowdfunding is that you can go from having an idea in the morning to raising funds from complete strangers around the globe that afternoon — provided your pitch is compelling enough. The stress and complexities of seeking traditional funding are removed — and the simple question of, “Do you want my product/business?” can be answered “Yes” with dollars — before you’ve incurred a single cost.
As often goes in business, getting a pitch just right is crucial — and the same goes for crowdfunding. You’ll need to start getting a campaign up and running by uploading a pitch description and video to your chosen crowdfunding platform. A key tip is to be honest, transparent, and authentic in your goals and intentions — with a concise and easy-to-understand description of your business and aims. You’ll want to include all the basics, including who you are, what amount of money you’re hoping to raise, when your project takes place, how people can get involved, and what they’ll get in return.
In addition to your pitch text, be sure to include a pitch video. Indiegogo campaigns with videos raise 114 per cent more on average than projects without one. Videos help reveal your story and connect the audience to your idea — so be passionate and open when telling the story. You don’t need a fancy camera or video editing software to make a compelling pitch video, nor do you need to be a great actor.
The best way to get momentum for your campaign going is by sending personal emails to friends, family, and closest fans. In the first week or two of your campaign, you should plan on raising 25-40 per cent of your initial funds from this inner circle. You can keep these first contributors updated on your campaign’s progress by posting regularly on your campaign page and social media. You can also leverage your social channels for promotional purposes — giving your campaign a boost beyond your inner network and reaching strangers who share your passions.
A winning formula
There are many ways to reach crowdfunding success, and we see campaigners innovating every day with creative new approaches and strategies. However, our data insights do point toward six core elements that the majority of successful crowdfunding campaigns share:
- Have a pitch video
- Offer three or more perks or rewards to contributors
- Keep your campaign updated
- Post media to your campaign page (pictures, video, infographics, etc.)
- Link to other sites relevant to you and your campaign as well as to your social media channels
- Keep your campaign period brief — two months long at the most
On average, the campaigns that follow these six rules raise eight times more money than those that don’t. At Indiegogo, we’re all about seeing people’s ideas and dreams come to life — and I wish you the best of luck as you pursue yours! (Danae Ringelmann co-founded Indiegogo.)
SOURCE: Real Business