Crowdfunding is a new vehicle for raising money for projects and business ventures. During 2012, $2.7 billion were raised employing the use of crowdfunding. This method of fundraising usually takes place over the Internet. Supporters that believe in projects can now respond to crowdfunding campaigns by donating to entrepreneurs’ and artists’ projects. The most popular crowdfunding sites are IndieGoGo, RocketHub, Kickstarter, GoFundMe, GiveForward, Crowdfunder and Crowdtilt. These sites represent only a small fraction of the crowdfunding sites in operation worldwide. It is estimated that there are currently about 308 active crowdfunding sites.
As banks have tightened restrictions for small business lending, crowdfunding is growing as a viable option for entrepreneurs. While this method for raising money has proven to provide a pathway to success for many, other entrepreneurs have not been successful utilizing crowdfunding platforms. It is important for participants interested in raising money in this manner to make their offer as appealing as possible. There is a lot of competition for donations.
Below are 10 tips learned along the way by both successful and unsuccessful participants.
1. Commit to the necessary time to prepare the best campaign possible. The more complete and clearly stated the campaign project is, the more likely it is that financial supporters will respond. It is not uncommon for an entrepreneur to spend weeks or even months preparing to launch a campaign.
2. Clearly state your financial goals and why the target amount needed is necessary. It is particularly important that monetary goals be justified for higher amounts. Be sure to give careful thought to the amount of money required so that you can intelligently answer questions that donors might have about how the money will be spent.
3. Use provocative videos and photos to sell the project. Videos have proven to be a compelling force for keeping the attention of viewers. With this fact in mind, a poorly produced video could backfire and make a negative impression. If you decide to produce a video, be sure you can make a quality product that looks professional. Being able to keep a person’s attention for two to four minutes is not as easy as it sounds. If you do not have the resources or talent to create a first-rate video, then be sure to place photos in the campaign information for full impact.
4. Test your campaign out on trusted friends and family members to get feedback before taking the campaign public. Use feedback to improve the campaign.
5. Keep your backers “in the know” by sending them updates about your progress on the campaign.
6. Get publicity for the campaign. Advertising or writing an article for a related blog is one good idea for getting some attention. Using social media is another way to create some buzz and get interested donors to check out your offering.
7. Give donors a valuable and memorable keepsake in thanks for donating.
8. Spend money on marketing. Buying an email list or hiring a PR expert can make all the difference in a campaign’s success. Donors must be aware of your campaign before they can give.
9. Get a budget together for starting and marketing the campaign to increase your odds for success.
10. Send out press releases.
About the Author: Adam Smith is currently blogging for Startup Valley. He loves to blog about different crowdfunding platforms and how to create an effective crowdfunding campaign.