By Evan Vitale
In our previous blog posts, we introduced crowdfunding and how it works for businesses, charities, individuals and more. Now, let’s take a look at how you might consider using crowdfunding for your startup business.
Capital, financing, money, etc. (whatever you want to call it) remains the No. 1 challenge for any startup in order to launch your dream; get things off the ground and have remaining fundings to maintain growth.
If you don’t have cash on hand, you might first turn to a bank for financing. However, a financial institution will need collateral such as a home in order to secure the business loan.
Your next chance might be with family or friends. Maybe you’ll look for an angel or a venture capital firm, etc.
Or, perhaps, you’ll skip all the aforementioned red tape and go directly into seeking funds from crowdfunding opportunities (i.e., Kickstarter, Indiegogo, etc.). Will it work?
It all depends on you. For example:
- You might have a great idea, but you’ll need to package and present it in a way to attract potential crowdfunding investors. The first challenge to any crowdfunding project is to get donors interested in helping you. Your presentation will be like a sales pitch in that you need to get people excited.
- Let’s say you want to raise $25,000 for your startup idea. Here, instead of giving every donor a percentage piece of ownership, they will receive a gift for their donation. This might be the product you hope to create and sale or something simple like a coffee mug.
- Ask for exactly what you need. If your startup requires $25,000 then create a crowdfunding plan and presentation seeking $25,000. Don’t ask for more or less. Some plans have hit their target very quickly and some fall dreadfully short.
The best way to begin your crowdfunding plan is by doing research. This includes:
- Talking to your accountant, your banker and your attorney.
- Consult with your business coach, if you have one.
- Visit and do deep research on crowdfunding sites. Know them inside and out. Investigate plans that succeeded and those that failed. What did they do right, or wrong?
If your first crowdfunding attempt fails, find out why. Did your potential investors not like your plan, idea or product? Or, did your presentation fail to “wow” them? Every idea isn’t going to be an instant winner and, yes, some great ideas never get off the ground because startup owners didn’t prepare a selling presentation to attract investors.