Is your startup dying? Raising funds for startups is becoming more and more challenging. If you’re passionate enough about your startup, then you’ll have the courage to go through hardships and overcome all the challenges. The question is how to find investment and grow your business. The amount and the quality of investment can change the future of your startup, so you need to think twice before seeking traditional seed capital, applying for bank loans, or starting crowdfunding campaigns.
Getting rejected by potential investors can be very disappointing, especially at the early stages. This is why you start considering the idea of creating a crowdfunding campaign. But, do you really need it? In this article, you will learn more about what crowdfunding is, how to start a crowdfunding campaign, and what you can expect from it.
What is Crowdfunding?
Crowdfunding gives you an opportunity to raise funds with the help of the general public, or ordinary people who like your idea or business and want to help you develop it. In other words, it’s like a large pool of individuals who are ready to invest small amounts of money in a startup or a business idea. Many campaigns are rewards-based, so the investors receive a gift or something in return for their participation.
For example, Oculus VR raised more than $2 million in 30 days, after which it was bought by Facebook for $2.3 billion. Another successful example is Tile, a Bluetooth tracker which finds keys, wallets, and other everyday things in seconds. They raised $2.6 million, exceeding their target of $200k within 24 hours of launching the campaign.
Crowdfunding seems to be a miracle for startups, an easy way to get investment. But, unfortunately, not all startups succeed. Many crowdfunding campaigns fail. In fact, 70% of campaigns don’t reach their goals. But, even if your campaign fails, you can still have some benefits.
What Can You Get From a Crowdfunding Campaign?
First of all, crowdfunding is an alternative opportunity to raise money for your startup.
It’s a safe and low-risk solution. With pre-sales, you can reduce the financial risk of your business and generate revenue.
With a smart crowdfunding campaign, you can significantly increase your brand awareness and get exposure.
Build your audience and get feedback from them to improve your product.
Collaboration opportunities and new partners.
The Drawbacks of Crowdfunding
The creation of a crowdfunding campaign can be time-consuming and require extra financial resources.
You can fail your campaign by not reaching your target and return all the invested money.
The failure may damage the reputation of your startup.
Someone can steal your idea/project if you’re not protected by a patent or a copyright.
How to Get Started With a Crowdfunding Campaign?
After considering both the benefits and drawbacks of crowdfunding, you need to decide whether you want it or not. If you think that your startup needs a crowdfunding campaign, then pay close attention to the rest of the article, as you will learn how to create a successful crowdfunding campaign.
Follow these 8 steps to launch your campaign:
Define your goal
The success of your campaign depends on how clearly you define your goal. You have an idea or a business and you need to raise money to develop it. Turn your idea into a goal by defining why it is important, how is it different, who will benefit from it, and how much investment you need.
Do a market research and find your target audience
To define an achievable goal, you need to conduct a market research and learn more about your target audience. This will help you to understand the demand for your product and the needs of your potential consumers. If you know your audience, it will be easier for you to reach them and get their support.
Choose a crowdfunding platform
There are several crowdfunding platforms like Indiegogo or Kickstarter where you can launch your campaign. These platforms help you to manage your campaign, share your information, videos, reviews, and all the necessary information about your project. Depending on the provided services and the outcome, they will take up to 10-15% fees.
Prepare a perfect video pitch
What is the best way to present your idea or product? Of course, a unique and informative video. According to Kickstarter, projects with videos were funded at a much higher rate of 50%, compared with the 30% rate of the projects which didn’t have one.
So, how to create a great video for your crowdfunding campaign?
Keep it short, up to 2 minutes,
Get the attention of your audience right at the beginning,
Use visuals to keep them engaged,
Tell your story,
Choose the right music,
Add a call-to-action.
You can also create animated explainer videos, which can be very effective for presenting your product or idea. To save your time and resources, you can use video maker tools which offer ready-made video templates.
Create a landing page to build your email list
Why exactly do you need an email list? Having a list of people interested in your product will make it easier for you to contact them and keep them updated. To collect those emails, you need to have a basic landing page with all the information about your project and what you offer.
Your landing page should have clear headlines and descriptions, high-quality images, and a form. To make it more informative, you can add your video pitch and some customer reviews to it. Then, you need to promote your landing page to drive traffic to it. Once people fill in the form, they will appear in your email list, and you can directly contact them. When you launch your campaign, the first thing you need to do is to send emails to the people from your email list.
Reach out to journalists and influencers
Another effective way to reach your target audience is gaining exposure through journalists and influencers. So, you need to create a list of media contacts who might be interested in sharing your project. Start by finding media outlets or blogs relevant to your business and add them to a list. Then, find the right contacts and influencers to connect with and send your request. Develop your outreach strategy, test it and keep your list up-to-date.
Build your audience on Social Media and keep them engaged
After defining your target audience, you need to develop content which will be interesting to them. Create your pages on different social channels and start sharing engaging content depending on the interests of your audience. Pick the channels where your audience is more active and don’t forget about adding call-to-actions. Plan your social media strategy beforehand, as it takes considerable time and efforts to build an active fan base and to keep them engaged.
Launch your campaign
Are you ready to launch your campaign? After making all the preparations, it’s time to launch your campaign and see the results of your hard work. While you’re waiting for the investments to flow, don’t forget to share the news and updates with your email list.
What makes your audience buy on day 1 of your campaign? Simple. The feeling of urgency and excitement. Always keep your audience excited by creating special offers or rewards. It’s all up to you and your creativity.
No matter at what stage your startup is, an investment can help you boost it and keep you on track. But, before putting all your efforts on finding investors, stop and think about alternative financing methods. Crowdfunding can be a great solution for your startup. It has both benefits and drawbacks, so you need to decide whether you need it or not. And, in case you decided to start a crowdfunding campaign, follow the steps above to make sure that you do it right.