How To Get Crowdfunding For Your Business Idea
Raising capital investment for a project is nothing new. However, what is relatively new is the process by which projects are funded via the web by complete strangers. It’s an attractive idea although it’s important to be mindful of the fact that typically it works for certain types of projects.
Kickstarter is the most popular destination used for getting crowdfunding and although there are numerous high profile success stories that began with Kickstarter it’s important to note that the failure rate with Kickstarter is at about 60%.
Where To Look?
Historically, Kickstarter is typically most successful with creative types of projects, as is IndieGoGo. For a more traditional approach that is specifically business oriented, it’s probably best to use ProFounder.
Not only is it important to identify your target audience but it’s also important to then align this goal with the appropriate site. For example, Kickstarter isn’t typically associated with projects involving non-profits or mobile apps. There are always exceptions although it’s important to do the necessary research in order to decide what’s best for you and your project.
In the Plans
Now that your target audience is set, drafting a thorough plan of action is essential. The key ideas here are clarity and transparency. Those interested in investing in your project are most likely to donate to your project (the most common amount on Kickstarter being $25) when goals are stated clearly at each step in the process.
Also, this lends itself to a sense of transparency which is key in communicating to the potential investor. If someone views your video on Kickstarter or reads your plan of action and afterwards doesn’t feel that transparency is part of your game plan, then they might not feel confident investing in your project.
The time frame you’d like to use to raise cash is also very important. While you’re typically allowed to use sixty days on crowdfunding sites, the most successful of projects usually last 30 days. Short and sweet is the key here because excitement for a project is at its beginning and then at its end.
Important to Remember
Not only is it important to be clear about your objectives, be transparent in your plan of action, but it’s very important to specifically have outlined how you plan to use the money raised. This means a breakdown that includes how much money you are going to pay yourself, production, shipping, and materials.
Rewarding the Investors
Sites like Kickstarter mark differences in donation amounts so that almost anyone can be a part of your project. With this in mind, sites include a section in which you decide what the various rewards will be for the various levels of donation to your project.
For example, if you’re using Kickstarter for an invention, you could reward those who donated $500 with the actual widget. For donations of lesser amounts rewards could be things like documents of you working diligently (videos, photos, etc) on the idea so the project backer can see the process by which you achieved success. Acknowledgements and credit work well as rewards because people seeing in writing that they were a part of a successful project.
Be Sure to Remember:
The most important things to remember revolve around the idea of having a clear plan of action and its relationship to transparency. The investor has to feel confident that his or her hard earned money is going into a project headed by someone fiercely passionate and determined to make their project a success. Anything less than this is simply unacceptable.
Remember this when drafting your plan for crowdfunding your next project and things will go that much smoother.