Crowdfunding has become one of the most popular means of non-traditional financing in the world. One 2017 statistical report noted that nearly 35 billion dollars have been raised through crowdfunding since its inception and is expected to grow rapidly over the next five to seven years. This means of financing has funded everything from businesses startups to community events and personal causes. If you are considering crowdfunding as a way to finance your startup, there are a few questions you might want to ask yourself first that may save you time and money later.
1. Who Will Want To Invest In My Startup?
While many individuals have found success with crowdfunding, proper planning can be an important factor in how much money you raise. Therefore, before you go live with your campaign, you may want to ask yourself who your potential investors are and how to present your fundraiser in a way that will draw them into the project.
For example, if your startup business is an auto repair and detailing shop and you plan to have parts available on a company website as well, your potential investors may be both local and national, so it is important that your campaign outlines details that will attract each. You might include such facts as the growth of the auto repair market online and the need for knowledgeable mechanics at local shops. Knowing your audience can increase your chances of outlining a successful campaign.
2. What Is My Financial Goal?
While you may not have your startup planned down to the penny, having an idea of how much money you want to raise can be vital for an effective crowdfunding project. Not only does it give you a goal to work toward, but it may give donators more confidence that you have taken the time to plan the financial side of your startup carefully and that you can answer any investment questions they have with confidence.
As you consider your financial goals, you may want to work with a mentor who can guide you and help you understand the hidden costs of running a business. Finding a startup mentor who launched his or her business through crowdfunding would be ideal, especially if this is your first experience with crowdfunding.
3. How Can I Advertise My Crowdfunding Campaign?
Making people aware of your project can be one of the most important aspects of its success. Therefore, it is wise to create a social media plan before you launch your startup. Create new accounts with your startup’s name and logo and use the same indicators across all the social media platforms. While you can use your personal accounts to boost awareness of the campaign, a separate account that offers information about your startup may give potential investors more confidence about donating.
Planning your social media campaign carefully can result in drawing attention from international investors. Some of Asia’s wealthiest men, such as retail mogul Sjamsul Nursalim, have made their fortune by expanding their investments into international markets, so you may want to plan for eventual expansion once your campaign gains traction.
4. What Kind of Crowdfunding Campaign Best Suits My Plans?
It could be that you have donated to crowdfunding campaigns in the past. However, when it comes to business startups, you have several options when it comes to how to include those who donate to your success. You could choose equity crowdfunding, which gives each donator a small stake in your business, or you could offer rewards to those who give a certain amount. Movie tickets, gift cards, electronics, and tickets to sporting events might all work as incentives to give your crowdfunding project a boost.
Starting a business can be a considerable financial challenge. However, the right crowdfunding campaign could put you on the path to success, for now and for the future.