Starting a business may prove to be challenging if there is no money and capital available. You can crowdfund a startup by starting a crowdfunding campaign and raising enough funds for the project to succeed. As an startup, it’s crucial to your success to find investors. Crowdfunding can be a great alternative to other financing methods, as you don’t require any major resources. In some cases it can even just be an idea.
Now you do need to understand that crowdfunding works under several different models. Most common are rewards-based and equity. So you will have to figure out your approach and long term project goals of the campaign. There as well many existing platforms available to host your campaigns and you can also utilise a more direct approach on your own website. It does not hurt to evaluate crowdfunding as an viable solution, if you’ve exhausted all the options and have no means of financing your project.
Consider these tips if you are looking into crowdfunding for your startup;
- Prepare for your campaign well. You will have to be ready to sacrifice everything. As well a lot of thought needs to go into the details. How much do you really need to raise? How will you attract investors? Plan out everything and make sure you properly work out the costs involved.
- Create an audience and following before you launch the campaign. This audience is very valuable to the overall success. Not only can they later support you with pledges, but also with valuable feedback in the early stage. This is great for improvements and more success. Use social media as much as you can.
- Strongly consider rewards-based campaigns if you have a product that can be pre-ordered. Because then it’s particularly helpful to have a rewards-based campaign to cover the manufacturing costs of the product itself prior to purchase. Recommendation is always to avoid equity if you can and presell the product instead, or to offer some other rewards mixed in. There is a lot of creativity with with reward based campaigns and in the end it can lead to more success.
- If you don’t have a product that can be pre-sold strongly consider equity campaign. For example online software or mobile applications would be hard to pre-sell. As well they would need much more in terms of external marketing costs and general overhead in development. So equity may work better in these cases, as people would be more interested to invest.
- Communicate regularly and provide frequent updates. It is very important to keep your current audience and later customers regularly updated. To talk to them about issues and future improvements as well. Don’t leave them in the dark, as it will make you look very bad, potentially destroying your image and reputation.