The A-Z of Crowdfunding for Startups
“When you determine what you want, you have made the most important decision of your life. You have to know what you want in order to attain it.” Douglas Lurton, Author, Forbes Magazine
Often we hear business collect millions of dollars through crowdfunding for startups. Today, entrepreneurs actively engage in crowdfunding, but what it is, and why so much hype around it? This article highlights the importance of crowdfunding for new businesses, and shares ways in which you can accumulate a large chunk of money to kick-start your venture.
What is Crowdfunding?
The strategy of raising several small amounts of funds from a large group of people, usually over the Internet to financially aid a venture or a project is termed Crowdfunding. Several young entrepreneurs, filmmakers, and financial houses have lucratively raised funds and cultivated this new culture of obtaining finances minus the traditional route of approaching a bank or moneylenders for a business loan.
While there are a few potholes in this new method of accumulating funds, but the profits distributed among investors is huge, just like a share market where investors enjoy a windfall. To resource your business goal, you must have a strong conviction about your product/service first. This implies that your business must have clocked robust profits in the previous few years.
Crowdfunding for Startups- How to Start
Crowdfunding is a lucrative platform for both startups and investors. It helps new businesses accumulate funds for expansion or jumpstart the venture, for the investors, it is a high return on their investments (ROIs). Before you launch the process you must weigh three important factors, and these include,
Prepare Your Pitch Well: Your product should highlight the problems it can solve and not the benefits it offers. When you speak about the specific challenges and your tailored solution, with relevant market statistics, your investors would care to listen; the idea would greatly appeal to them, and motivate them to make a bigger investment.
Evaluate Your Financial Goals: Borrow only that much that you require to fund your business goals. Over borrowing can result in a disaster in the future, as it would limit your capacity for crowdfunding, in case if you fail to keep up the initial promises made to the investors. Instead of borrowing a lump sum, establish short-term goals in tandem with funding phases, it would make good sense to your investors and keep them hooked in your startup.
Prepare Your Investors’ List: Do not wait until the launch date of your crowdfunding campaign to gain investors, rather do your homework beforehand. This entails pitching your innovative startup idea to a group of potential investors and gaining their trust and investment, so you can announce your initial round of funding with confidence on your campaign launch.
Crowdfunding for Startups- The Process
When it comes to investment in a startup, trust matters the most. Your potential investors seek conviction in your novel idea to take that giant leap of faith. Moreover, your idea must be strongly persuasive to reflect the genuineness of your idea and the scope of the possibilities it exhibits. Therefore, you must have records of your market statistics, profits generated, and any initial funds you have.
What you are offering may not click with all investors, but on what scale are you helping the society can take you to new heights with your potential investors. In this manner, you must garner trust and confidence among your potential investors to convince them to invest their resources into your creative business idea.
You need to prepare a presentation, preferably a power point, focusing on these key aspects
• Gauge the market potential to highlight the possibility of a feasible business idea
• How your business idea is better than your competitors?
• Why investors should invest in you?
• What is your score on the Success yardstick?
The moment your crowdfunding procedure spreads its wings, you can expect the Press (Print & Media) to cover it on their first page. The media is a blessing to your dreams so utilize it wisely. Steer clear form any bad publicity and stay on top of the news with pioneering ideas, or a new round of investments, or highlighting your business expansion.
Use the different online and offline media channels to promote your business and its positive results. The more you advertise your business achievements and aspirations the better are the chances of new investors gaining interest in your business ideologies. Some of the best methods to broadcast your crowdfunding strategies are through YouTube, Facebook, LinkedIn, Twitter, Press Release, WhatsApp and more.
When you have sufficient investors, you have ample funds to run your startup. Additionally, you will have the capacity to utilize a part of the funds for advertising campaigns. Thus, you increase the probability of tapping a larger market that who would require your products/services, instantly. Resultant, your business expansion would further build a base for new markets and for potential investors.
Some of the best ways to promote your efforts and success is participating in business seminars, connecting with a social cause, or celebrating your success with your clientele by distributing freebies or offering huge discounts.
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