Small businesses are no longer dependent on the banks for funding – crowd-funding is the hot new way to raise money.

There are many crowd-funding platforms that give you the opportunity to pitch to potential supporters, but it’s not just an easy way to get money there are some essential things to consider.

  1. How powerful is your pitch? Whether you’re selling direct to consumers or to other businesses you need to engage the emotions of your potential backers.  This means creating something compelling that the reader ‘gets’.  Do explain how your product or service will help the end-user in terms of ‘what’s in it for them’ – how their life/business will improve with your solution in place.
  2. Do your due diligence. Unlike a bank you won’t be expected to provide a financial business plan, but you do need to be sure that you’ve done your research into the demand for your product and get some evidence that there is a real market.  The more evidence you can include in your pitch the better.
  3. Pick your platform. There are plenty of options and they have different audiences.  For instance, Indiegogo specialises in holistic, lifestyle, art, music, etc, while Kickstarter is more entrepreneur-focused.  These are just two – but they also have different terms and conditions – with Kickstarter you have to raise the full amount of your target to receive any of the money, while Indiegogo delivers whatever you raise, even if you don’t hit the target.  Read the T&Cs carefully before making your choice.
  4. Structure your pitch well. Some platforms will give you guidance as to what goes in each section – others leave you to decide what to say without any advice.  To keep your readers engaged you should aim to have some sub-headings that lead the potential investor through the pitch and persuade them to take action.  These sub-headings might include – What the project is; The target audience; The benefits; Why you want funding; What you’ve done so far; The time-frame for the project (remember to under promise and over deliver – not the other way around).  Every pitch is different so you may have different headings.
  5. Stick to the point. Don’t ramble in your pitch – be clear about what your product or service is and WHY you’re developing it.  Be specific about what the money you raise will be used for – people don’t support anything that’s a bit woolly.  Ideally, you will have a specific project to fund with costs and deliverables.  Remember you’re aiming to sell the idea to potential backers so write your pitch carefully.
  6. Use images to enhance your pitch. A picture says 1000 words – pictures of your product, graphs, charts and video are all powerful ways to get your message across.  Use relevant, good quality images and video clips.  Stick to short videos (90 seconds max).
  7. Offer a range of investment options. Start with a ‘no-brainer’ of a few pounds or dollars and then a number of other options for medium investors to substantial backing.  For instance, your investment points might be £5, £25, £100, £250 and £1000.  For each investment point you’ll need to offer a reward to each investor – that might just be an entry on the ‘Investors Roll of Honour’ for the lowest level, but bigger investors will expect something more substantial.  This might be one or more of the finished product, depending on the cost it will retail at – their investment should represent a saving on what they would pay in a shop. If you’re funding something that isn’t a product or isn’t appropriate for everyone you might think about T-shirts, bags or other rewards that are appropriate to the level of investment made.
  8. Tell the truth! In some crowd-funding formats they ask you to list the drawbacks, potential problems, etc – don’t avoid this, but do explain your plan B should it happen.
  9. Share your project. Don’t expect the world to know your project is live – get on social media and tell people about it – on LinkedIn, on your Facebook Page, on Twitter, Instagram, Pinterest – and anywhere else you’re active.  If you have a list tell them by email – they’ve already shown an interest in you and your business so they’re more likely to be good investors.
  10. Communicate. Once your project gets off the starting blocks, communicate regularly with your backers to tell them what’s going on.  This allows you to let them know where time frames slip or changes to manufacture (if it’s a product) are applied.

If you do all this you’ll have a sound proposition.  Good luck!