Any entrepreneur that wants to raise capital through crowdfunding should understand some of the most important factors that could contribute to success. This is because of the numerous projects that launch and compete on major crowdfunding platforms like Indiegogo and Kickstarter. More than 50% of the campaigns still fail to reach their funding goal, so it is important to know where a lot of emphasis should be put to boost the chances of getting funded successfully.
There are 3 key crowdfunding success factors identified from campaigns for product ideas across the sectors:
Make sure the pitch is great
In order to attract most of the potential backers that will come across your pitch on a crowdfunding platform, there must be a compelling story behind it. If nobody can believe your story, nobody can fund you. You business project or product idea could be great, but that’s not enough. You must creative in the way you communicate about the greatness of your project. There are certain things your target audience will need to hear in order to pay attention and begin to think whether you deserve their support. A great pitch for your project will make them sense the degree of honesty, transparency and authenticity they can associate with it. Your story should also be visually impacting and must therefore make use of images and video. Research has shown that including a personal video makes it possible to raise 114% more. Smart boost system reviews the latest trends and stays on top of best practices for crowdfunding to bring you the best campaigns in the market.
It takes great efforts to make a crowdfunding campaign successful so doing the necessary things in a proactive manner can make a huge difference. You could therefore make sure you are able to raise the initial 30% from people you already know, including friends, family members and other individuals you can manage to approach. That can be very beneficial if it gives you a great momentum and thereafter you can convince more potential contributors. Other people are likely to fund you if they can already see a significant number of pledges or funding has been made.
Even before the launch of your crowdfunding campaign, you should already be marketing and promoting your project through email, Facebook, Twitter and any other relevant social media platform. Making the best use of bloggers, Facebook groups, influencers, newsletters, events and conferences is a great way of increasing your audience reach. Your updates must be regular to make a greater impact. Research shows that making updates every 1- 4 days can double funding. Taking all actions discussed so far could help raise 8 times more funds than not doing so.
Audience that cares
Targeting the right audience must be done for any crowdfunding campaign to be successful. Take the type of project or your product idea into account and understand its market. Women projects are more likely to benefit more from crowdfunding platforms than from venture capital funding. Any type of project has a community that cares and proper audience targeting is therefore key for crowdfunding success. That makes it easier to decide on how to reach the audience for meaningful engagement that results to more backers for crowdfunding success.
Entrepreneurs traditionally used to get funds for starting their new businesses from financial institutions or wealthy individuals after convincing them that their ideas are viable. Bank loans, venture capital and angel investors are however not the most reliable sources of funds for anyone that wants to start a new business. Even after polishing your business plan and doing all the necessary market research, you will still find it almost impossible to get any funds especially from financial institutions, VCs or angel investors. The main reason for this is because over 50% of business startups usually end up failing. But crowdfunding changes a lot of dynamics that addresses most of the challenges entrepreneurs face when starting their businesses.
First and foremost, crowdfunding provides an alternative source of funds without most of the difficulties associated with traditional sources. It is like a funnel with the wide open side facing a crowd of potential contributors. The crowd will help you raise the capital you need if you convince them that your business project is it. That pushes an entrepreneur to be thorough with their business plans, product and market research. In other words crowdfunding accomplishes more than just raising the capital.
Not every crowdfunding project ends up becoming a success story, but even if your campaign doesn’t succeed in raising the amount you are targeting, you still gain in other ways. That includes understanding the reason why your project doesn’t attract enough backers, or if you targeted the right audience in the first place. So entrepreneurs fail with their first round of crowdfunding campaigns, then later on after correcting any mistakes they learned launch a fresh campaign and successfully raise targeted amount of capital. Crowdfunding gives entrepreneurs an opportunity to test their business projects as it is their potential customers that qualify as backers. A project that attracts enough backers and raises funds successfully most of the time ends up becoming a successful business.
Crowdfunding can be very useful in bringing press attention to your project. A lot of PR and marketing activities must be carried out in order to attract prospective backers. That also means attracting potential buyers for the products or services you intend to provide to the market. About 3 to 6 months before you even launch the crowdfunding campaign on a platform like Kickstarter or Indiegogo, you should be marketing your crowdfunding project on relevant social media sites. You must have identified the target audience to reach via Facebook, Twitter or similar social sites depending on the nature of your business product idea SmartBoost System can help you with those strategies as well.
You also pitch to the traditional media even using social media platforms like twitter that most news reporters depend on, so you must be creative to come up with a great story behind your project. That should be a story worth getting you the necessary press coverage, especially around the time of launching your campaign. It helps if the campaign goes live on Indiegogo or Kickstarter with the right momentum that if maintained can meet or exceed the amount targeted to be raised. A crowdfunding campaign provides you the opportunities needed to build a customer base, discover business partners or allies, raise additional funds from other sources after the campaign, develop future product ideas and much more. With the reward based type of crowdfunding, an entrepreneur maintains total business ownership because backers do not become shareholders.
Crowdfunding is an effective way of funding your business. It however takes a lot of effort and dedication to raise funds for your small business. Since there are many businesses competing for supporters like you, it will be great if you come up with unique strategies to attract potential supporters whether from generation of many page views to provision of adequate press material. Consider the following tips to increase your chances of success:
Social media presence
Social media presence is important for any business but must be strategically done to meet your business needs. You can consider picking networks that can well suit your content strategies and marketing. The kind of promotion you come up with should well be accommodated by the platform you choose. Also consider platforms that have potential backers.
Create an attractive media page
The press often recognizes popular crowdfunding campaigns. It would be a great advantage to use the press for your crowdfunding campaign rather than relying entirely on your social media pages like Facebook. It is important that you have a good website to get media attention. Generating good press materials that the media can easily access online can also be useful. The press will more likely promote other projects if they can’t access good or enough material about your business story.
Update your crowdfunding page
A successful crowdfunding campaign relies on effective communication. Your potential backers will always prefer constant updates which you should always do on your crowdfunding platform. Don’t hesitate to put information on the crowdfunding page no matter how good or bad it is. Keeping your backers updated even after the campaign is over is important.
Create a professional video
You can come up with a great video to support crowdfunding campaign. It will be relevant to inform people more of your campaign through videos rather than through plain text or stationary images. When people see a video of your campaign, they will have a better understanding of your project and want to get involved if the offerings you provide appeal to them. A low quality video looks unprofessional and may harm the reputation of your campaign. It would be better to hire the services of an expert to help you create a quality video that will attract people if you lack the relevant skills of pitching a great video.
Set up a reward scheme for your Campaign
A crowdfunding campaign can as well include a reward scheme. Creating a reward scheme will involve people to contribute towards your business with the hope of getting a reward. The reward may be in the form of a product or service offered by your company. Your reward scheme should have different price points.
Study your predecessors
Always remember that there are some entrepreneurs that have already succeeded with good crowdfunding campaigns. It would be good if you invested some time to study their projects and strategies to have some background idea on implementing your campaign. Though successful crowdfunding is not guaranteed, considering strategies that have made other startups succeed can give you some ideas on how to maximize your chances of success.
Crowdfunding can only be successful if the right rewards are offered. So an entrepreneur has to be very creative with the type of rewards they decide to offer. Prosocial conversions are not easily achieved because you have to convince potential donors to accept rewards that are not received immediately. Indiegogo and Kickstarter are the two most popular crowdfunding platforms and they allow crowdfunders to offer non-financial rewards. Such rewards are often in form of products that donors will not receive until months later after successful crowdfunding with SmartBoost System. Research also shows that after crowdfunding most projects tend to be late in providing the rewards promised to their donors. Given that most donors will do a lot of research and are aware of all these facts, your reward must be something worth their contribution even if they have to wait longer than you promise to them.
Being creative with the type of rewards you can offer to prospective backers can result to larger contributions. More people are likely to fund your project to reach its funding goal within a shorter period of time. The following are some ideas for the kind of rewards you could come up with:
Provide an option to publicize contributors-Smartboost System
When people donate to support your crowdfunding campaign, you could offer to publicize their names. It is something many would consider important since they may want others to perceive them as compassionate. This is particularly an effective strategy for projects that serve some social good in addition to an entrepreneur’s business goals. The names of donors could be publicized for different levels according to their contributions. Although it should be optional to be publicized, many contributors would consider it a leadership decision. They may not only choose the option but could also be motivated to contribute more, especially if there are different categories of contributions with different ideas for publicity.
Give tangible and practical rewards
For any amount backers choose to give Smartboost Sysem knows they would like to know they will get real value. If the reward is tangible and practical, there is a greater economic value and potential donors will be motivated to invest more into your project. For instance, if your crowdfunding project is meant to support production of a music album, you may want to promise donors that they will actually get a physical copy of the album. That would be a better reward than simply letting them know they will get access to your album. They may not be sure what type of access or how they will get it.
Promise many fun tiered rewards
Major crowdfunding platforms will allow you the option to provide different tiers of rewards. In that case you request potential backers to give different amounts of contributions and for each level you give a reward of a certain value. If you have a good number of tiers for the rewards, the donors will have a choice to make and that could be a fun experience. Too many tiers could however be overwhelming and should be avoided. If you choose to offer your potential backers an experiential reward, just make sure it is something they would consider valuable.
Crowdfunding is the practice of raising money by involving a group of people in your project. The people in this group contribute money to fund your venture and translate your idea to reality. Crowdfunding is also called crowdsourcing or alternative finance. Other names for crowdfunding are crowd sourced capital and crowd financing. Crowdfunding is a relatively new sector and it is still developing. However, it is growing very fast because it has great advantages for the project initiator and the investor. Before you take your project online for crowdsourcing, you need to understand how the process works.
The three parties involved
Benefits for the entrepreneur
Benefits for the contributor
One reason crowdfunding is growing at a very fast pace is that it is done via the internet. These days, many online crowdfunding platforms offer investors and donors the perfect opportunity for crowdsourcing. Below are some of the things you should do before you launch your crowdfunding project.
Do your home work
Crowdfunding is a method of raising capital from a large number of people. Family members, workmates, friends, corporations and potential investors form part of the target group when raising the required amount. Through the online platform, the initiator proposes the idea on a select crowdfunding platform and interested parties support the idea through contributions to raise the required capital.
The Rise or Origin of crowdfunding Firms
Origin of GoFundMe
Founded in 2010, GoFundMe was initiated by Damphousse and Ballester in 2008 as a website under the name “CreateAFund”. Within the two years, upgrades and developments were made to allow members to offer a full description of their projects including the amount required. The platform allows users to share projects on social media and email links as well as other valuable crowdfunding tips hence increasing their reach for target audience.
Origin of KickStarter
With American roots, Kickstarter was launched in 2009. In 2010, the website managed to raise over $10 million when it was named as one of the “best inventions of 2010”. Its operations started rolling out projects outside America in 2012 giving it presence in United Kingdom, Australia, Canada and Australia among other countries. Kickstarter iOS app for iPhones was created in 2013 making it the first crowdfunding platform to use the mobile platform.Like GoFundMe, the platform offer a wide range of crowdfunding tips for their users.
How to start a crowdfunding campaign
Unlike the traditional methods of raising capital, crowdfunding is easier, faster and cost effective way to raise the initial amounts. Essential crowdfunding tips for a successful campaign include:
• Ensuring availability of adequate information to convince potential investors. Uploading photos, videos and detailed information provide the audience with a deeper insight.
• Choosing a platform that allows fast and efficient communication platform. It is on this platform that potential investors pose questions seeking answers and clarification on the project.
• Giving regular updates on the progress of the project. Potential investors require constant and regular updates on any changes to the original concept.
• Social media presence is important to reach a wider population and create awareness.
Choosing the best type of crowdfunding
There are three main types of crowdfunding. Choosing the ideal type depends on the type of product or service on offer and the target growth of the project. These include:
Donation based crowd funding does not offer any form of returns on amounts invested. It is an ideal way to raise funds for humanitarian undertakings such as medical assistance, charities, and disaster relief.
Reward based funding provides a promise for a gift or reward in exchange for the contribution. Contributors may receive a promise for the products once the production process is done. It is ideal for new starters as it offers an opportunity to raise capital without giving away the stakes of the project.
Investors in equity based crowdfunding become partial owners of the project. They are entitled to a share of profits from the project. Amounts contributed are termed as shares and used as the basis to compute rewards.
Origin of crowdfunding brought about an avenue to raise capital without the hassle of the traditional methods. Potential investors are always on the lookout to identify prospective income generating projects that will give them values for money invested. This ensures a steady and promising resource for inventors and other projects that require funding.
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Interestingly, the first ever successful crowdfunding campaign was started by a rock band in 1997. Since then it has become a revolutionary way to pull funds for various campaigns—from financing musical tours to putting smiles on cleft-lipped children. Here is an in depth look on how crowdfunding evolved as well as crowdfunding tips for getting your first funding campaign going.
Even before the rock band’s funding success in the 19th century, the origin of crowdfunding goes way back to the 1700. The Irish were the first people to birth the concept through what they called the Irish Loan Fund. These funds were availed to the low income families living in rural areas to help in business ventures and upkeep. It was an author, Jonathan Swift, who pioneered this funding campaign which sparked a series of other campaigns (300 to be exact) that so over 20% of Irish households benefiting.
From the Irish, another country picked up the concept. It wasn’t America or the UK but the evergreen Asian country of Bangladesh. This was in 1976 when one Dr. Mohammad Yunus introduced microfinancing into the country that financed female entrepreneurial ventures in rural villages. His idea became successful and by 1983, morphed into what is present day Grameen Bank. The financial institution boasts of over 8million members with 97% of them being female beneficiaries.
Finally, the USA caught up with the trend, and it was through the British rock band’s Marillion that was sourcing funds to finance their America tour. The result was astounding as the band managed to raise a cool $60,000 through their online fan base. Several other artists saw the advantage, and a website (Artist Share) ensured whose sole purpose was to help artists reach out to their fans for monetary assistance to finance their musical ventures.
Even though it took USA a while to get going, it is the country that has made crowdfunding popular to the entire world. In fact, America has the largest pool of crowdfunding organizations like Kiva, Prosper, Indiegogo, Peerbackers, Kickstarter, Startup America Partnership and the two popular ones: Fundable and GoFundMe. The ‘Fund me’ concept is now globally accepted and comes with a host of advantages.
Originally, to get your project funded meant you first had to come up with a killer proposal that would woo a potential investor from the limited supply. But today, a ‘Go fund Me’ campaign can reach millions of internet users and all you have to do is sell your passion. The traditional funding methods meant convincing investors why they should give you the full $70,000 to start your business. However, a crowdfunding online campaigns only asks as little as $5 from one individual, and if 100,000 people get to donate, that is a cool $500,000. A ‘Fund Me’ campaign gives you more reach, makes it easier to sell your story and there are billions of people around the world ready to help.
Crowdfunding Tips to Get You Started
The secret is simple; first start an awareness page on social media and tell your inspiring story. Hashtags sell these days, so come up with one that will sound catchy on Facebook or Twitter. Additionally, come up with a great video about your project that will move the audience. Narrow down your target audience, make your story as personal as possible then live the ‘GoFundMe’ link at the end of it all. You don’t even have to say ‘Donate’ when you know the crowd is convinced! What’s more, most crowdfunding websites offer great crowdfunding tips tat you can take advantage of.
Check back with SmartBoostSystem Reviews for more tips and tricks and reviews on the crowdfunding industry.
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