Mathew Norbury, founder of Vitamin, gives his top 10 tips on how you can successfully crowdfund your business.
Vitamin is using crowdfunding, both rewards and equity based, to help business accelerate growth and achieve our targets. Here are a few tips based on our experiences that will help you successfully crowdfunding your own business!
Make sure you validate your ideas and practice presenting the concept before you embark on your campaign. People are only going to get behind something they believe is well thought through and above all is going to work. The success of your crowdfunding will largely be decided by how much work you put in during the three to six-month period before you launch your campaign.
Choose the right platform
There are three main types of crowdfunding platforms: Donation or rewards-based, lending-based, and investment or equity-based. Each has advantages and disadvantages depending on the nature of your business and what you’re looking to achieve. Rewards-based crowdfunding is open to more potential funders who put in less. It also doesn’t require you to give up equity or repay funds with interest which is part of the lending-based UK funding model. However the challenge of providing rewards for and communicating with donors should not be under-estimated.
Look at other campaigns
Always start by researching prior campaigns – both successful and unsuccessful – to see what worked and what didn’t. Krowdster is a handy little app for this. It has all kinds of features to help maximize your crowdfunding efforts, but even just checking out the success stories is fascinating.
Get a quality video
An engaging, shareable video which clearly outlines your project and inspires support is absolutely crucial. It doesn’t need to be expensive, but does need a lot of thought and effort to get right.
Aim to achieve 30% of funding within 48 hours
The first 48 hours to one week of a campaign are its most crucial phase. This period is the barometer to determine if your pre-launch strategy has been a success. If you are not confident that you will meet at least 30%t of your funding goal in this period, then you should postpone the launch until you are. Statistics show that getting early traction in a campaign is the key to overall success.
Make the most of your existing connections
It’s easy to forget those closer to home when you get caught up in the excitement of a crowdfunding campaign. Engage with friends, family, work colleagues, sports teams, your local pub first!
Pressing the flesh
Many crowdfunding campaigns are managed online, but don’t forget to spread the word in the real world to. If it’s appropriate, host a party. Introduce what you’re doing and remind people why they’re there. Have a laptop or ipad to pass around so they can view the project online and donate there and then. The odd glass of wine will also help loosen the purse strings.
Stick to your guns
There will be days you feel down and dejected. There will be detractors and naysayers. Ignore them. Most crowdfunding campaigns are tapping into a niche audience, some more so than others. Not everyone is going to ‘get it’. Find the people who do and focus on them.
Have some ‘skin in the game’
Crowdfunders generally want to see the people they’re supporting bring something to the table too. If you haven’t invested your own money it’s unlikely you’ll get to the stage of being ready to launch your crowdfunding campaign anyway.
More than just money
Crowdfunding is not always about the money for your business. If you’ve ever watched Dragons’ Den you’ll have seen how businesses choose certain Dragons to get on board. As well as the financial investment they bring experience, expertise, contacts and so on. The same can be said for crowd funders – If they’ve ‘invested’ both financially and emotionally in your idea you have an army of ambassadors to help promote it, you can research and test products and features before launch.