Crowd-funding is on trend – everyone is using it from start-ups to Olympic sports teams. Is it something you could use to help your business move to the next level?
Anyone can launch a crowd-funding campaign – and there’s a blog here about creating a good pitch – but the question is ‘is it right for your business?’
Crowd-funding is aimed at people who want to invest some of their money – and is particularly aimed at getting a lot of very small investors to build up a bigger amount. It’s based on the belief that getting many people to part with £5-£10 is easier than getting one person to give £1000.
To persuade people to invest that ‘no-brainer’ small amount you need both a really good story and a good distribution plan to get the word out.
‘Give me some money!’
‘I’m starting a new business’ really isn’t enough to persuade people to give you money. You need a compelling reason and to show that you’ve thought this through, done your research and have a sound plan.
First-time investors need something to engage their emotions and get their plastic out. Serious investors – and there are a few who visit the crowd-funding sites regularly looking for good investments – are looking for sound business sense and a plan that looks like it has legs.
If you are starting with a dream and not much else, you’re unlikely to get much support. If you’ve clearly done research, planning and can give numbers and evidence that you have a market who are interested you could find it an excellent means of getting your project funded.
WIIFM?
Investors are looking for some kind of return on their investment.
For small investors that might be a thank-you webpage where they can post a short message – or a low cost giveaway item that is relevant to your project.
The more money people invest, the more they’ll expect in return. If you’re launching a product it might be the first off the production line offer for a much lower price than the RRP; for instance if your product retails at £20 and they invest £50 – they’ll receive three personalised versions of the product before the general release into the market.
If your project is related to developing something that is less tangible, like a knowledge-based service – you might need to be more creative about what you offer as rewards for investors.
The best advice I can give you is to go on your chosen site and do a search – see what the most successful pitches offer as rewards. What could you offer that’s similar and relevant to your business?
If you think you’ve got a good project – go for it, but remember you will have to drive the project forward both in promoting your crowd-funding page and in delivering to meet your promises.
