Learn how crowdfunding has transformed entrepreneurship and discover the strategies that lead to successful campaigns.
Great entrepreneurs take that spark and run with it. Provided that you've hit the innovation jackpot. Unfortunately, others fail to take action quickly enough. The latter watch as their "great idea" materializes under another brand, company, or entrepreneur.
The Spark of a New Investment
So, what's the difference between successful entrepreneurs and the ones that don't make it? If you're like a segment of people, it could go like this:
"I would have used that great idea if only I had the funding for it."
There are countless entrepreneurs or would-be entrepreneurs who don't pursue when it comes to money, investments, startup funding, finances, or initial capital.
But, the truth of the matter is, these are just the excuses – most people lack the drive or passion that fuels their thirst for success, be it in starting their own business or taking their "great idea" from that napkin to the drawing board.
How Does Crowdfunding Work?
Typically, a crowdfunding campaign starts when a person sets up their profile on one of the many crowdfunding platforms such as Indiegogo or Kickstarter.
Reward-Based Crowdfunding
The truth is that people aren't prone to investing in you just because they believe in you and your cause. A reward crowdfunding campaign acknowledges those who make contributions to your crowdfunding campaign.
Peer-To-Peer Crowdfunding
With peer-to-peer crowdfunding, those who invest in your cause can expect to receive their hard-earned money back with interest.
Equity Crowdfunding
Investors who make contributions to an equity crowdfunding campaign expect equity as a return on investment.
Why Use Crowdfunding?
Crowdfunding has proven to be the proverbial silver bullet that entrepreneurs have looked for to land a successful launch when dealing with low capital. The following are some of the main benefits of using crowdfunding platforms as an origin for your brand:
- Expand Your Reach– One of the main reasons why entrepreneurs reach out to crowdfunding platforms such as Kickstarter, Indiegogo, and others is because it gives you access to thousands of potential investors.
- Customer Experience– Creating a crowdfunding campaign profile is a great way to get a conversation going about your big idea. You can also promote your campaign using social media and email marketing to pique the interest of potential investors who may have been hesitant towards contributing to your campaign at first. As you continue to communicate with your audience, it will give them a better idea of your business philosophy and what your brand is all about. This will further ignite their interest in your campaign.
- Efficiency– A crowdfunding campaign is by far one of the most efficient ways to grow funds for your big idea. Furthermore, it allows entrepreneurs and startup owners to have complete control over their fundraising efforts. Additionally, by getting access to such a large pool of investors under a single platform, it does away with the need for entrepreneurs to pursue investors individually, which is ineffective and time-consuming.
Best Practices for Crowdfunding Success
Know Your Audience and Be Clear
Before you start any crowdfunding campaign you need to identify your audience. This is going to be the target demographic that's most likely to respond to your efforts. There are several crowdfunding platforms out there. You will need to identify the best option. In this case, it will be the platform that attracts the largest number of people from your target demographic. More importantly, you need to make it clear what you are offering in terms of your new, innovative idea. Then, disclose the return to your investors.
Preparing to Launch
It's no surprise that the most successful crowdfunding campaigns are planned out months in advance. This is to ensure that their marketing strategy has been properly tweaked. It's best to have all the pre-launch kinks ironed out early on.
Make Yourself Heard
Tell potential supporters about your campaign ahead of time to get them interested. Try to send out a press release or frequent reminders via social media posts, blogs, and emails. If you have the budget for it, use Cost Per Click/Paid Ads. The idea is to let your audience marinate in the potential of your next innovative idea so that when the time comes, they will be ready to contribute to your cause.
Expand Your Network
The internet is brimming with would-be entrepreneurs all pitching their next idea. What gives you the edge?
The answer is networking. Similar to real life, you won't get far if you're not ready to mingle with the resource that is the people in your circle.
Whether it's through social media posts or traditional emails, you should ensure that your idea is receiving exposure. Networking doesn't have to be strictly online. A visit to your local grocery store, sports shop, or fitness center is a good pitching ground for your idea. It can start with a simple, casual conversation about your upcoming crowdfunding campaign.
The Launch Day
Come launch week, you need to send out a message that connects you to your investors. This message should go out sooner than later to avoid the mid-week disengagement from your audience. No one wants to throw a party without any RSVPs back. Post the launch on all social media platforms beforehand (Facebook, Pinterest, Instagram, etc.) on your website, landing pages, guest posts, and forums. You can even send out reminder emails to ensure your audience is notified.
The Follow-up
Even if you started strong and hit the ground running, you will need to maintain the pace throughout the entire lifecycle of your crowdfunding campaign. Keep sending out reminders to nudge your target audience in the right direction. Use urgency as a tool to get people to take action "NOW" rather than later.
Even if you've reached the end of your crowdfunding campaign, that's no excuse to hang your hat and call it a day. Use the principles of "FOMO" (Fear of Missing Out) to drive in that last burst of traffic. One way is to create campaign-specific crowdfunding pages and unique hashtags to help spread the word. Social media analytics tools offer insights into metrics needed to gauge your campaign's performance. Last-minute efforts can make or break a plateau in the crowdfunding process.
Ending Note
The success or failure of a crowdfunding campaign isn’t solely determined by having a "great idea". it is equally important to make sure your crowdfunding campaign has been strategized and executed in an efficient way. This lies in the fact that although most crowdfunding newbies have aspirations, their idea cannot come to fruition from opening up a campaign, alone.
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