23 Sep How Crowdfunding Can Help Your Startup Business
Starting a business today isn’t easy. Most startup businesses require resources and a certain amount of capital to get off the ground. However, a new concept for small, startup businesses is changing everything, and might just make it easier to start that small business than ever before.
So what IS crowd funding?
We first started hearing about “crowd funding” in 2012, when it was still a relatively new concept. Some small businesses may have caught wind of it, but maybe didn’t really understand how it worked or how it could apply to them.
Crowd fundraising is a fundraising method for startup businesses. It’s about strategically finding other organizations or individuals to “sponsor” and ultimately help raise money and fund a new startup business. This avoids a startup business or “solopreneurs” from having to come up with a large sum of capital or resources to get their businesses rolling.
Since 2012, many startup businesses have gotten creative in their fundraising strategies. Some startups have even created various crowd fundraising strategies for various audiences. Some strategies even include promotions and rewards, particularly for individuals who are participating in a startup’s crowd funding campaign. For solid organizations, many startups offer attractive investment options that are equity based. Some startups have even used both strategies simultaneously.
So what does this mean for my startup?
So how do startup businesses know which platform or crowd funding avenue is right for them? Of course this depends on the nature of your business. What is your product or service? Who is your target audience? What does your market look like? All these play a factor in your crowd funding campaign and how you market it.
For example, if you are launching a product, then a rewards or promotions-based campaign may work best. This gives your target audience a way to pre-order or “sample” your product and build trust and credibility. This also helps you build a client base that you know will purchase and recommend your product early on.
If you are launching a service, then what you are ultimately providing is a solution to customers and clients. Therefore, an equity-based investment campaign may work best in this scenario, because there is less risk associated for investors.
How do I know my crowd funding campaign will work?
One common misconception that many startups have when launching their crowd funding campaigns is that even if your crowd funding campaign is successful, this doesn’t necessarily mean your product or service will be successful. Proper execution and managing stakeholder expectations are keys to launching a successful and valuable product or service.
Crowd funding is a highly effective fundraising strategy for startup businesses that continues to grow. While it has helped many startup businesses save on startup capital and resources, refine and retune their product or service before launching, and learn their target market, it also involves a great deal of planning and strategy in order to ensure success.